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Crypto’s impact on climate change.
Blockchain technologies – to the enthusiasts, they promise endless financial freedom and the ability to finally take part in the web economy. But does all that come at the expense of our environment?
Yes, for some blockchains, it really does. Bitcoin is probably the largest offender. Never built with energy efficiency in mind, a single transaction on the largest cryptocurrency uses as much power as 700 thousand Visa card transactions or 55 thousand hours of watching Youtube. And that won’t change, because Bitcoin’s technology is locked in place.
And similarly, an Ethereum transaction is estimated to use a week’s worth of energy for an average US household.
But not all is lost. The problem is that those two examples use “proof of work” - meaning the solving of complex computer problems - as a way to validate transactions. Climate-friendly approaches favor “proof of stake” - meaning that owning a large stake gives validators the power to approve transactions nearly instantly.
Ethereum will actually switch to “proof of stake” in early 2022, likely reducing energy consumption by 99% in the process. Called Ethereum 2, this update is the most important it has ever gone through.
And now you know why crypto can be bad for the planet if done wrong.
And tomorrow, we’ll talk about what a wallet is and how it works.
Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.
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