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Do Environmentally Conscious Cryptos Exist? How Fantom Sets the Bar High for ESG-friendly Cryptocurrencies

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Thu, 06/03/2021 - 07:54
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Heewon Jang
Fantom sets the bar high for green cryptocurrencies, now other crypto projects need to surpass what it offers
Do Environmentally Conscious Cryptos Exist? How Fantom Sets the Bar High for ESG-friendly Cryptocurrencies
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Sustainable cryptocurrencies are becoming more and more sought after by investors today who are seeking to lessen the environmental damage caused by traditional crypto technologies. As a solution to the long-term issues faced by established cryptocurrencies such as Bitcoin and Ethereum, Fantom has focused their efforts since their founding towards ensuring user and developer satisfaction with fast speeds, low transaction fees and EVM-compatibility so no work is lost if developers transport their decentralized applications from Ethereum onto Fantom. Another focal point for Fantom has been improving the environmental consciousness that companies like Bitcoin and Ethereum did not originally consider.

Below, we answer why it’s important to consider ESG-friendliness when investing in crypto, what the landscape looks like and how Fantom is lessening their energy expenditure.

What ESG is and why it matters

ESG is the individual standard for a company or industry’s environmental, social and governance performance. The focus for cryptocurrencies has been particularly linked to the ESG performance of cryptocurrency miners due to the high energy requirements associated with the mining process -- oftentimes, there are terrible environmental effects that result from these technological processes. As bigger investors gain stakes in cryptocurrencies, they become increasingly aware of how these assets may negatively affect their ESG credentials, thus, attention is turning towards available energy efficient blockchain platform alternatives.

How Fantom compares to top cryptos in ESG performance

Since its inception, Fantom Foundation has realized the importance of energy efficient cryptocurrency technologies and anchored their platform towards it. Currently, Fantom has incredibly low kilowatt hours (kwH) per transaction on the platform compared to other technologies. At their current rate of about 500,000 transactions per day, Fantom consumes 0.00000301 kWh per transaction. This is 35 million times less than Ethereum and 300 million times less than Bitcoin. Considering that Ethereum has about 1.5 million daily transactions, versus 500,000 daily on Fantom, even if Fantom had the same daily transaction amount, it would be consuming 10 million times less energy than Fantom.

Importance of Proof-of-Stake

Bitcoin and Ethereum both utilize the Proof-of-Work consensus mechanism algorithm to mine, which is a reason behind why their transactions each take so much energy. It is considered the most energy intensive way to mine. Unfortunately, due to the amount of Bitcoin mining occurring today, it runs on cheap energy that is generated by coal. This means that Bitcoin’s annual carbon emissions are greater than that of some countries today. Proof-of-Stake consensus mechanisms are far more energy-efficient, and it is the model that Fantom currently runs on. Ethereum plans on eventually transitioning due to how much more environmentally-conscious it is compared to its current PoW model.

Since day one, Fantom has looked at the shortcomings of current crypto technologies and surpassed them in their own way, be it with transaction speed, transaction prices or even the energy expenditure being caused by popular technologies today. As investor focus shifts towards making sure that they are not investing in crypto assets that are causing irreversible environmental damage, the fastest and fast-growing green coin would be a great fit.

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About the author

Heewon Jang is a freelance journalist and the editor of CryptoGags section.
She is responsible for entertaining crypto content and bitcoin humour