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Crypto’s Gas Problem and Its Solutions

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By , Updated On October 12, 2022

Issues such as global warming, melting glaciers, and other challenges facing our planet are often not treated seriously. And they are real problems to which we are also contributing daily.

Many of our actions affect the planet, including investing in cryptocurrencies. People didn’t wonder whether crypto was environmentally friendly initially, but unfortunately in a lot of cases, it is not. Some cryptocurrencies require a lot of energy, specialized equipment, and resources to operate. 

However, it’s essential to keep in mind the environmental costs of gathering natural resources and using energy and electricity to create and maintain fiat currency and our current banking system. In that regard, some are not environmentally friendly.

For instance, the annual energy consumption of Bitcoin is comparable to that of some entire nations, like Argentina. According to some statistics, Bitcoin alone could contribute to a 2-degree Celsius rise in global temperatures in 30 years by emitting 36.95 megatons of carbon dioxide (CO2) annually, comparable to New Zealand.

The Impact on the Environment

Crypto assets, mining, and other actions related to the field can have significant environmental impacts. Blockchains that require an energy-intensive process, crypto-related or otherwise, can generate excess carbon if they consume energy from non-renewable sources. Moreover, NFT production also consumes energy. Numerous statistics and studies demonstrated that crypto mining influences global warming.

Global electricity generation for the crypto-assets with the largest market capitalizations resulted in a combined form of tons of carbon dioxide per year, which means 1% of the world’s annual electricity consumption or about 0.3% of the world’s annual greenhouse gas emissions.

According to NBC, a study published in the 2019 issue of the scientific journal Joule determined that “the annual carbon dioxide emissions from Bitcoin production are estimated to range between 22 and 22.9 million metric tons.” That equals the emissions from 2.7 billion homes, or Jordan and Sri Lanka combined.

Most nations allow Bitcoin mining, but some have effectively banned the activity. For example, one of the biggest economies in the world, China, has banned Bitcoin mining. Additionally, the national government outlawed all cryptocurrency transactions.

The demand for cryptocurrency mining will rise as the adoption of digital money expands globally. By enabling the grid to manage more significant percentages of renewable loads, Bitcoin mining can hasten the transition to a low-carbon future while generating green energy jobs and assisting in the fight against climate change.

Gasless Blockchains, an Actual Solution?

Developers started to act to reduce their impact on the environment. In the crypto market, one of the solutions proposed was gasless blockchain. Users have received this solution well because it solves several problems besides pollution.

The First Problem: Gas Fees

A gas fee is a blockchain transaction fee paid to network validators for their services to the blockchain. Without the fees, nobody would have the incentive to stake their ETH and help secure the network.

Cryptocurrency enthusiasts frequently question the viability of blockchain fees and how they will affect the blockchain industry’s future progression. That’s because, generally, every blockchain transaction must pay a transaction fee. They typically need Gas fees (in Ethereum) to be completed and added to the blockchain, starting with simple transactions and progressing to creating a non-fungible token (NFT) or creating and executing a smart contract.

Traditional blockchains have the drawback that some industries or businesses do not want to pay for gas or that their customers must pay for it just to complete these transactions. And the cost of these transactions on an industry/company level can add up, no matter how small it may be. Due to major corporations having extensively large data storages, users need to take this into account if they want blockchain technology to break the barrier into real-world business.

Following this, many users chose to use gasless blockchain technologies. These innovations radically change traditional blockchains that are compatible with standard EVMs. Besides that, they help resolve the Scalability Trilemma, which we’ll discuss below.

The Second Problem: the Scalability Trilemma

The Scalability Trilemma means blockchains usually need to sacrifice one of the three fundamental elements (Security, Scalability, and Decentralization) because they cannot function together.

Most Blockchains try to boast a perfect solution to the Scalability Trilemma. However, they usually have flaws in at least one of these (if not all 3) sectors. 

Various projects want to minimize these flaws by utilizing a gasless Blockchain, effectively prioritizing scalability by nature, so we can focus on Decentralization and Security. Redlight Finance uses such a gasless Blockchain, at the same time solving the environment and the fees problem.

These gasless blockchains do not solicit users to stake the governance coin to receive a governance token for gas (which is still “technically free”) and require 0 gas per transaction.

Conclusion

It is crucial to consider the well-being of our planet because there is no point in having money if there is nowhere to enjoy it.

Inform yourself first about the investments you want to make, what blockchain you are using, and its long-term impact on the environment. Invest wisely!