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Far from debating the usefulness of cryptocurrencies, it is true that some of them have long been in the spotlight for consuming huge amounts of energy to validate their transactions. We explain it: to generate each block where the ledger of the movements of currencies such as Bitcoin and Ethereum is stored, a proof-of-work system is used with hundreds of computers that guarantee the veracity of the chain of blocks, which also consumes a lot of energy. This is called mining, and miners receive a reward for each generated block. These computers, in reality, are an extra layer of security, difficult to replicate.
The continuing criticism of cryptocurrencies has been that the electricity consumed came from fossil fuelssomething that has already been declining, because the mining carried out with this energy is not profitable, only renewables are cheap enough for the business to be profitable.
For this reason, many of the mining farms are located in points of the planet where geothermal or hydraulic electricity is accessible. Still, only 40% of the energy needed by cryptocurrencies is renewable, but it is changing due to the search for economic efficiency of miners.
However, this does not take away from the fact that the energy needed by cryptocurrencies is enormous, wherever it comes from. If Bitcoin were a country, it would be number 30 in energy consumptionor to another order of magnitude the electricity needed to generate one bitcoin could power a home for nine days.
Solutions to energy consumption come hand in hand with a new verification system called ‘proof of stake’, or what is the same, nodes that accumulate enough minimum capital to validate transactions, something not too different from what it does a bank, but in an automated way. This system makes failing verification highly financially costly. Ethereum, the second cryptocurrency in capitalization, is going to abandon the old proof-of-work system for the proof-of-stake system that does not need energy to work. So the electricity consumption of cryptocurrencies will fall.
But bitcoin and NFTs seem to be the only thing that exists in the world of cryptocurrencies and blockchain, but as they say, the tree often hides the forest. Millions of non-Bitcoin networks and projects are harnessing crypto technology to make a difference in the world, with sustainability and zero carbon footprint in their DNA. This is how the Zeal Foundation, give people with low financial inclusion access to new technologies, creating a financial system to bring prosperity to the whole world. For example, this is the case of Brazil where Celo is widely accepted and its use has skyrocketed in recent months.
«The Internet brought information to the whole world, but it was not like that with financial inclusion. The digital economy allows you to do micro-jobs from anywhere in the world, but it is not so easy to get paid, and that money can be used immediately in the supermarket”, explains Rene Reinsberg, CEO of the foundation.
Celo began with the goal of make payments more accessible and sustainable, since the proof-of-work methodology that we already mentioned, the one that Bitcoin uses to create, has two problems, it is not useful as a payment currency, because it is very slow, it takes 10 minutes to carry out a transaction, and the second reason is electricity consumption necessary. The same goes for the accessibility of blockchain technology, it is not easy for everyone to make a money transfer through this method. But, using, for example, the Valora application, just by knowing the recipient’s phone number, a transfer can be made, just like we do with Bizum.
One of the great challenges of Celo or of any cryptocurrency, is how to get those cryptocurrencies into the ‘FIAT’ world, the inbound and outbound vehicles, because although you can pay directly to a friend or in many stores directly, you still have to pay bills with current money. Something that his portfolio, Valora, solves with its connections with exchanges.
“We still need that bridge between current money and Celo, but it will be less and less necessary, money is nothing more than a technology that can be improved,” says Rene Reinsberg.
There are more than a thousand projects that use the light infrastructure and zero carbon footprint of Celo, many of them with the aim of improving the world. For example, we have Toucan, which wants to mitigate climate change, which, according to its founder Raphaël Haupt, is a coordination problem. Toucan uses the carbon credits that are generated by planting new trees, and that companies can buy to neutralize the pollution they create. In this way, a truly liquid market is created for the first time, open 24 hours a day, where anyone can buy carbon credits, thus becoming a democratized financial good, and where anyone can invest. In this way, the greater the demand for loans, the more capital will go to the companies that repopulate the planet. Crypto technology can also verify that there is no fraud, that some trees are not double counted, as is currently the case.
“Try to send money to the Amazon, how are we going to compensate those entities that repopulate the forests so that they continue to do so, if the capital transfers do not occur immediately,” Haupt points out.
The same happens with plastiks.io, which seeks the traceability of plastic, with a marketplace where companies can offset their plastic footprint, through the purchase of an NFT that certifies it.
And so the projects are innumerable, proof of this was that, at the Celo congress, Celo Connect, held in Barcelona, creators from all over the world met, especially from South America, Africa and the United States with the common goal of creating a better world for everyone.
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