Let the green and clean technology win! These were the concluding lines of my last blog. Little did I realize then the current spotlight on the NFTs would drive this message so loud and clear.
At IBF Net, one of the projects that is dear to our hearts is IBF Affluence which would perhaps be the maiden Shariah-compliant NFT Exchange. In addition to being Shariah-compliant, it would promote Islamic art, calligraphy and music in various forms. While this project is still in the drawing board stage, we realize it is perhaps not too late in the day, thanks to the rather slow appearance of NFTs in the stage. What may have caused this rather delayed appearance?
Most of the NFTS I used as examples in my last blog while underlining the mindboggling returns and the consequent spotlight on the market place are guilty of leaving an enormous and devastating environmental footprint. As a recent NYT article succinctly puts, â€œIn a nutshell, when an artist uploads a piece of art and clicks a button to mint it, she or he starts a process known as mining, which involves complex puzzles, awesome computing power and a huge load of energy. That is because Ethereum, the platform of choice for NFTs, uses a method called proof of work to create digital assets like nonfungible tokens. According to an estimate backed up by independent researchers, the creation of an average NFT has a stunning environmental footprint of over 200 kilograms of planet-warming carbon, equivalent to driving 500 miles in a typical American gasoline-powered car. Other attempts to calculate the energy use of blockchain have also arrived at gargantuan numbers. Researchers at Cambridge University have estimated that mining Bitcoin uses more electricity than entire countries like Argentina, Sweden or Pakistan. The concern for environment has led several well-known artists to abandon their earlier plans to board the NFT bandwagon.
Ethereum has said it is reducing its footprint by moving toward a different model called proof of stake, which doesn’t require miners to compete to add assets to the blockchain. The new model is supposed to vastly reduce the computational work, and by extension, associated emissions. But since announcing the idea several years ago, Ethereum has been vague on when the change will actually happen. Certainly, the switch is not going to be easy. It is indeed fraught with grave risk of failure.
As a member of Algorand community, I certainly did not have this feeling of guilt. Why? A recent study provides a useful and revealing comparison of average energy spent by alternative protocols for the confirmation of a single transaction.
- Bitcoin: 930 kWh per transaction
- Ethereum: 70 kWh per transaction
- Algorand: 0.000008 kWh per transaction
However, for Algorand the story doesn’t end with being the most energy-efficient network. Its newly cemented partnership with ClimateTrade sets a new industry standard for blockchain sustainability. The latter is a leader in CO2 emissions transparency and traceability that is using blockchain-based solutions to improve the efficiency of sustainability efforts for leading corporations around the globe. It provides a marketplace where users can directly offset their carbon footprint by selecting the most suitable carbon credits from the ones available, and earning the official certificate.
From Carbon-Neutral to Carbon-Negative
While the Algorand blockchain is already carbon-neutral, the network ultimately wants to become “the greenest of them all.” Algorand recently pledged to be a carbon-negative network now and in the future. To achieve this, Algorand and ClimateTrade will implement a sustainability oracle which will notarize Algorand’s carbon footprint on-chain for each epoch (a set amount of blocks). With its advanced smart contracts, Algorand will then lock the equivalent amount of carbon credit as an ASA (Algorand Standard Asset) into a green treasury so that its protocol keeps running as carbon-negative.
Algorand is seeing increased adoption by organizations that are aligned in their focus on sustainability, including ClimateTrade, GlobalCarbon Holding, and PlanetWatch.
PlanetWatch is the first blockchain company to focus on improvement of global air quality through systematic monitoring and thus contribute to solving the public health challenge of air pollution affecting millions. It has developed and deployed a global network of low-cost air quality sensors and environmentally conscious organizations and individuals who install air quality sensors, with the aim of validating, filtering, and displaying data on the Internet and through a mobile application in real-time. The monitoring network is delivering real-time data and is the first global immutable ledger for historical air quality data. The company is leveraging Algorand’s speed and scale for the world’s first distributed ledger for air quality sensors. It has been able to decentralize, incentivize and gamify air quality monitoring. The data collected by PlanetWatch air sensors are transcribed onto Algorand to create an immutable air quality repository accessible to all participants. Sensor owners receive PLANET tokens, an Algorand Standard Asset (ASA), in exchange for contributing data to the repository.
Global Carbon Holding uses blockchain technology to tokenize Carbon Credit assets in Asia and support a global, transparent marketplace to purchase certified carbon offsets, with the highest levels of quality and provenance. GCH holds certified carbon credits, which are registered with internationally recognized entities, and guaranteed by the individual tokens generated by the blockchain. Due to the transparency and immutability of Algorand’s innovative public blockchain, organizations who purchase Carbon Credits through Global Carbon Holding’s digital marketplace are able to do so with confidence and trust in the provenance of the assets they use. Algorand’s blockchain technology powers on-chain transparency of these new Carbon Offset tokens to facilitate easier price discovery and a fairer market for asset providers and Carbon Offset token purchasers.
The most recent partner as discussed already is ClimateTrade, a company whose main objective is to help companies achieve their sustainability goals by offsetting CO2 emissions and financing climate change projects. Carbon offsetting serves as a critical balancing mechanism in protecting our world’s environment, and ClimateTrade has optimized efficiency for businesses to achieve carbon neutrality. The company gives its users access to a marketplace where they can directly offset their carbon footprint by selecting the most suitable carbon credits, along with the records of all their transactions in a private dashboard. It uses blockchain technology to guarantee that carbon credits are cancelled in the corresponding registry, and to ensure that the money committed from the sale goes directly to the source of the project. ClimateTrade and its customers will be using Algorand as its primary infrastructure layer and leveraging its capabilities for carbon offsetting.
The commitment of Algorand to the planet and the climate seems to be unwavering. In the words of Silvio Micali, founder of Algorand, “Algorand is experiencing accelerated adoption and network expansion. As this period of hyper growth continues, we find it crucial to operate at a carbon-negative level. Indeed, sustainable growth is way better than growth.”