When cryptocurrencies and electricity meet
The year 2017 has been the most volatile year for cryptocurrencies. The incredible emotional rollercoaster for anyone who bought cryptocurrencies does not seem to be slowing down. The valuations of the cryptocurrencies went through increases of over 2000 percent. Which is definitely an awe-inspiring figure. And, with the hype Bitcoin brought to us, the ICOs have been increasing in number. Various companies have been attempting to tokenize pretty much everything.
However, there was a slight oversight during the tokenization of the world. Namely, the price spikes of cryptocurrencies brought about the energy spikes of transaction processing. And those spikes are very noticeable. In a period of only three months, energy expenditure of a Bitcoin transaction grew by almost 50%. Namely, at the end of September 2017, a Bitcoin transaction would spend enough energy for 7.5 US homes for one day. And three months later, it could do so for 10.5 homes. And this trend is something we should all monitor carefully.
But that is not all, the number of Initial Coin Offerings we can expect in the coming year can be worrying too. Most of them are just trying to use the fact that there is a feeding frenzy when it comes to ICOs. And, with all of those initial coin offerings, one thing is for sure. The amount of power we will need to carry all of those transactions out is going to rise.
But, before we go on, we should define a couple of terms. The first one is the proof of work system. This protocol (or a function) is a measure that is there to prevent denial of service attacks. And, of course, other potential abuses like spam. The other term we should mention is the concept of proof of stake. It is an algorithm that works in a different manner altogether. Namely, this concept defines the amount of mining or validating the possibility of a person when it comes to blockchain transactions depends on the number of coins that person has. This basically means that accruing points will greatly improve your mining power.
And, of course, most of us are all waiting for the moment for the PoS system to evolve and take over. However, for now, the leading cryptocurrency is still none other than Bitcoin. And Bitcoin still operates on the POW methodology. And that is what leads to the network of Bitcoin using up this much energy. The amount that will only be increasing in the future.
In essence, this is the cryptocurrency version of fossil fuels vs. renewable energy sources. The system works right now, but the growing demand for energy does pose an issue. An issue that will have to be addressed soon.
With this crisis in mind, one company chose to take measures to face the issue head-on. And that company is 4NEW Limited, a UK Waste to Energy plant. They held the pre-sale in the autumn of 2017, and they successfully raised over 30 million dollars. And since the funding of their plant is secured, they are allocating the electricity output into their coin – KWATT. One KWATT will be backed by 1 kilowatt of energy they can produce. And they will be able to generate 300 million kilowatts every year.
This power will go straight to mining other cryptocurrencies. Which means that they will have a sustainable system until the newer system is set up. And this system will not have a negative effect on the environment.
Furthermore, this is the first company whose main concern will be providing power to blockchain networks. And, if you have been experimenting with mining, you know how big of a thing this is. It seems like 4NEW has successfully found a way to tokenize electricity. The most important commodity of our civilization.
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