While some are strictly interested in the XRP price and crypto’s ability to generate returns and facilitate secure, low-cost, and nearly instant financial transactions without the assistance of intermediaries, others choose to dive deeper into the inner workings of these groundbreaking assets, paying particular attention to the carbon footprint they leave behind.
Ever since cryptocurrencies started to gain traction, moving away from the outskirts of the financial system and closer to the mainstream and becoming an integral part of our society, the issue of sustainability has been brought up numerous times, with concerns over the environmental impact of digital assets mounting considerably in recent years. According to the most recent data from the International Monetary Fund (IMF), crypto mining and data centers accounted for 2% of electricity usage in 2022 and almost 1% of total CO2 emissions.
As human-made greenhouse gas emissions continue to rise and the effects of climate change wreak havoc on the planet, putting everyone’s life and welfare at risk, evaluating the eco-friendliness or lack thereof of every emerging innovation or activity has become a normal practice nowadays and is to be expected.
Referring strictly to the crypto space, Bitcoin has been the main target of environmentalists and activists, being frequently criticized for the massive energy consumption needed for its issuance and transaction processing. But altcoins haven’t been spared the scrutiny either, with the most popular of them constantly held under the microscope.
Ripple (XRP), which has built a reputation as a highly innovative and reliable digital currency, is also touted for its eco-friendliness. So, it’s not just the hope that XRP could climb further, pushed by the winds of a new bull run, that makes Ripple appealing to investors, but also its sustainability credentials, which we’re going to examine here.
What makes XRP a green crypto?
A few years ago, while addressing the crypto sustainability issue in a blog post, David Schwartz, Ripple’s Chief Technology Officer, stated that XRP was an inherently green currency, comparing it to leader Bitcoin, which seems to score much lower in this respect. Ripple’s post specifically mentioned that XRP is 57,000 times more environmentally friendly than the pioneering asset. That’s quite a bold claim to make, so you’re probably wondering what are the arguments to back it up.
As Schwartz explains, sustainability was incorporated into Ripple’s design from the get-go. The project was thought of as a blockchain-based platform that enables fast and cost-effective financial transactions between different parties (mostly financial institutions), with the native token XRP serving as a bridge currency for these operations.
To achieve this goal and minimize the impact on the planet at the same time, the developing team already minted all 100 billion XRP tokens when they launched the blockchain. The company maintains a strict issuance schedule, releasing a fixed XRP amount each month from its escrow account, thus completely removing the energy-intensive mining from the process and offering a crypto alternative that doesn’t harm the environment.
As for the consensus mechanism, Ripple uses a unique social governance system called the XRP Ledger Consensus Protocol to validate transactions on the network. This means that trusted validator nodes from the Unique Node List (UNL) reach an agreement on the order and legitimacy of transactions by conducting polls and comparing notes. This results in much faster confirmations, considerably lower fees, and increased scalability, making Ripple an effective solution for cross-border transactions and reducing energy consumption to a minimum
By contrast, Bitcoin and many other digital currencies still employ PoW to achieve consensus and produce new tokens. In this model, miners have to compete against each other to solve complex cryptographic puzzles, with the winner being rewarded with freshly minted coins. The use of specialized commuters required to perform these tasks leads to massive energy consumption, slower processing times, and higher network fees. With most of the electricity used to mine Bitcoin being predominantly sourced from fossil fuels, the asset has a significant carbon footprint.
Ripple took its sustainability plans even further by joining forces with the Energy Web Foundation. Through this partnership, the company intends to achieve zero emissions, turning the XRP Ledger into one of the first carbon-free blockchains, which further emphasizes its commitment to green practices.
Other cryptos advancing the eco-friendly agenda
Obviously, Ripple is not the only blockchain project that has taken notice of the environmental implications of the crypto economy and aims to give the industry a green makeover.
Although Ethereum was a bit late to the party, the network also made considerable efforts to adopt a more eco-conscious approach when it made the switch from its initial PoW protocol to the current proof-of-stake (PoS) mechanism. Following the transition, commonly referred to as the Merge, Ethereum achieved a 99% reduction in electricity usage.
Cardano (ADA) is another asset that’s often praised for its environmentally-friendly stance. Similar to Ethereum, Cardano relies on a PoS consensus protocol named Ouroboros, which allows the network to conduct operations with minimal energy consumption. Cardano lists sustainability as one of its core values, alongside scalability and interoperability, resorting to different strategies to remain consistent with its eco-friendly vision.
Tezos (XTZ) adds to the list of digital currencies that embraced the PoS consensus mechanism to reduce their carbon footprint and align with the green standards that seem to gain more ground in the market by the day. What sets Tezos apart from other digital currencies is the ability to add new features and functionalities via the amendment process, ensuring enhanced flexibility and the possibility for endless upgrades.
The sustainability movement is giving way to a new wave of green cryptocurrencies while also providing eco-friendly solutions that can be added to already existing crypto projects that might require improvements in this area. Ripple, with its built-in environmentally conscious features, serves as a prime example of this shift towards greener practices in the crypto industry, conjuring up the possibility of a future where all digital currencies have a net zero carbon footprint by default.
