One of the Ethereum-killer blockchains is betting its green footprint is an advantage it can use to steer developers and investors away from the original smart contract cryptocurrency.
On April 21, Algorand celebrated Earth Day by announcing that it had introduced a smart contract that will ensure that the carbon footprint of every transaction is offset without any action from the people or companies making them.
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Instead, a portion of the network fees collected by the blockchain were permanently dedicated to buying carbon credits via ClimateTrade, a CO2 emissions market that tracks offsets on a blockchain – Algorand, of course – in order to that they are permanently and publicly accessible to companies seeking to erase their footprints.
And to make that point, the company repurchased — and blacked out — nearly 20 of Times Square’s iconic Earth Day billboards.
“We’re shutting down Times Square for an hour so everyone can just pause and reflect for an hour on the importance of Mother Earth,” Staci Warden, CEO of the Algorand Foundation, told PYMNTS. “Now, we also happen to be able to translate the energy use of Times Square because they are very progressive – Times Square was founded on the arts community, so they care a lot about that.”
This allows the Foundation to calculate the number of transactions that hour of power offsets. “With the energy that Times Square uses, we can do 350 million transactions,” she said. “That means 350 million payments.”
Highlighting blockchain’s potential to make payment processing faster, cheaper and more scalable, Warden said it would take the current SWIFT payment messaging system about a month.
“350 million payments on Algorand, which is 24/7, takes about 90 hours,” she added.
This carbon offset becomes a bigger issue when you think about payments, she said.
“When I think of payments, I think of financial inclusion,” Warden said. Highlighting the 1.7 billion unbanked people around the world that many blockchain projects seek to integrate into the global financial system, she added, “Payments are the bedrock of everything. This is where you build credit, where you build savings, where you build insurance – all better and more robust financial products start with payments.
If you’re thinking on that scale, Warden said, “You better make sure you’re carbon negative. It’s something that I think investors are looking at more and more these days too – not just ESG, but also the public.
Read more: Bitcoin’s new headwind: ESG investors double down on ‘mind blowing’ pollution
Algorand is one of many blockchains that is touting itself as a better mousetrap for crypto projects ranging from decentralized finance (DeFi) and non-fungible tokens (NFTs) to micropayments, in part because its proof-of-stake blockchain ( PoS) uses a tiny fraction of a country’s size electricity bill, both Bitcoin and Ethereum, the #1 and #2 blockchains, crashes every year.
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This has become an increasingly important issue even beyond ESG investors who focus on environmentally, socially and governance friendly companies.
The issue came to a head in the European Parliament last month, when an effort by EU green parties to ban power-hungry proof-of-work (PoW) blockchains – which would have been de facto ban on bitcoin – nearly managed to get incorporated into a proposed new Rules for Crypto Asset Markets (MICA) until a fairly aggressive lobbying and publicity campaign helped push it back.
Related: European Parliament votes against crypto mining ban
While the Ethereum blockchain is also PoW, it is transforming into a PoS chain. But the oft-delayed project isn’t expected to deactivate the bitcoin-style mining consensus mechanism — which both secures PoW blockchains and writes new transaction blocks on them — until next year at the earliest.
This means that until then it will remain dirty, very slow (12-14 transactions per second) and overloaded with so many transactions that the fees are in the dollar range at best.
Read more: Ethereum 2.0 will not be faster, says Vitalik Buterin. But it will always evolve massively
This gives much more scalable Ethereum killers, with fees ranging from pennies to fractions of a penny, plenty of time to attract projects and developers who want a greener footprint and greater scalability.