Why invest in green cryptocurrencies and which are the most promising?

20, Jan - BLOG

Lately, cryptocurrencies have been increasingly attacked by environmentalists for consuming too much energy. This is because, for example, Bitcoin uses a process called a proof-of-work system, which requires a huge amount of electricity to verify the validity of transactions. As a result, a Bitcoin transaction consumes ten times more electricity than a bank card transaction. In response to such a problem, an immediate solution has emerged - green cryptocurrencies. In our article, we will tell you how such projects work and consider the five most promising of them.

What is a green cryptocurrency?

There are several criteria that define a green cryptocurrency. Green cryptocurrencies use clean energy for mining and/or are based on less energy-intensive transaction processes. Whereas Bitcoin uses a proof-of-work system to create a single token, which requires a huge amount of computation and thus computing power, green cryptocurrencies instead use a proof-of-storage or proof-of-participation system that uses much less energy.

Green cryptocurrencies became popular immediately after the fossil fuel consumption of the original cryptocurrencies such as Bitcoin and Ethereum became known. In fact, the annual consumption of the Bitcoin blockchain exceeds that of some countries. With the realisation of the need to reduce greenhouse gas emissions, several green cryptocurrency projects have emerged around the world. These include Nano (NANO), Cardano (ADA), Stellar (XLM), IOTA (MIOTA), and EOS (EOS). These five green cryptocurrencies are seeing massive growth as many traders look to reduce their environmental impact with their financial products.

1. Nano (NANO)

Nano is an eco-friendly cryptocurrency that is free as it does not depend on cryptocurrency mining. Its scalable, low-latency network relies on a voting system for consensus. This is why it is a green cryptocurrency with one of the lowest carbon footprints on the market.

Nano uses a consensus mechanism called open representative voting (ORV). In this system, users vote on all transactions. At the core of the Nano system is a blockchain lattice that processes asynchronous transactions. Each node independently secures each transaction, an irreversible action that occurs in less than a second. Thanks to this system, only account holders can sign blocks on their account chains, which also protects the entire ecosystem from attackers.

2. Cardano (ADA)

Cardano (ADA) is the first peer-reviewed blockchain. It acts both as a digital currency and contract and as a support for dApps. The Cardano network can process up to 1,000 transactions per second (compared to 7 transactions on the Bitcoin blockchain). It was created by Ethereum co-founder Charles Hoskinson, so many experts believe it can compete with Ethereum.

Cardano uses a Proof of Stake consensus mechanism called Ouroboros. It is also the first blockchain protocol based on mutual review, making ADA one of the greenest and most popular cryptocurrencies. The ultimate goal of Cardano's creators is to make it compliant with global standards without sacrificing security. This is to offer a transparent and energy efficient payment system.

3. Stellar (XLM)

Stellar is a network created in 2014 as an offshoot of Ripple. Its native cryptocurrency, XLM, is also eco-friendly as it only requires a certain number of distributed nodes to validate transactions. Moreover, it aims to create a bridge between the traditional banking system and digital currencies. Stellar is already used by world-renowned companies (e.g. IBM and Deloitte) and even governments (Nigeria, France, Philippines, India, Ukraine).

XLM is a low-cost token because it allows its holders to carry out financial transactions at a lower cost. It is also an eco-friendly cryptocurrency as it does not depend on cryptocurrency mining. Moreover, users can create their own eco-friendly tokens. SCP, the consensus protocol used in the Stellar network, relies on a set of trusted nodes to validate transactions. This makes the process much faster and more efficient than proof-of-work or proof-of-stake algorithms. It also minimises energy consumption.

4. IOTA (MIOTA)

IOTA is a relatively stable cryptocurrency, and it is not the volatile cryptocurrency that some bold investors are looking for. However, the network uses a low power system, making IOTA an environmentally friendly cryptocurrency. IOTA (MIOTA) uses a Proof of Work algorithm to achieve consensus. However, it also relies on fast probabilistic consensus, which consumes very little energy. According to one PhD, IOTA's energy consumption per transaction is less than 0.11 watt-hours. This is much less than large financial networks and is estimated to be able to be reduced. In fact, the IOTA network could run on 95% less energy than it does today, but for now, future improvements are still under development.

5. EOS (EOS)

EOS is much more than just a cryptocurrency. It's actually a decentralised operating system based on blockchain. Developers can use it to create secure, transparent and compliant dApps and smart contracts. All nodes in the EOS network must obey the rules set by the community. The platform was launched by Daniel Larimer, founder of Bitshares and Steem.

EOS is one of Ethereum's main competitors. The network, which aims to reach a throughput of one million transactions per second, uses the Delegated Proof of Stake (DPoS) consensus mechanism, which allows it to create a new block every 0.5 seconds. It is also a technological democracy, as it uses systems such as voting and elections to secure the blockchain and validate its blocks. This variant of the classic proof-of-stake system is environmentally friendly and energy efficient by design.

Conclusion

Green cryptocurrencies not only reflect the sustainability trend, but also set new standards in the blockchain world. By investing in such projects, you are not only supporting green technology, but also becoming part of an innovative movement to reduce your carbon footprint. Choosing green cryptocurrencies is an investment in your future. Think about it and make the right choice.