Part Two: Crypto Goes Green, Eco-Friendly Nano Network Explained

Key Insights:

  • Around 15.5 million nano transactions use the same energy as a single bitcoin transaction.

  • Nano blockchain network uses an Open Representative Voting as a consensus mechanism, a variant of Delegated Proof of Stake.

  • Nano is launching its asset-settlement network, designed specifically for CBDCs.

A recent report published by Allied Market Research noted that the global cryptomarket size is projected to reach $4.94 billion by 2030. The report said it would be a critical year for crypto and also for the planet earth.

By 2030, the planet needs a net-zero carbon global energy transition, which is a challenge to achieve with global warming levels beyond 1.5°C, per the IPCC climate change report. However, reducing fossil fuel use, improved energy efficiency, and the use of alternative renewable fuels could possibly change this.

There has been comprehensive reporting on its heavy energy consumption when it comes to cryptos like bitcoin (BTC). But this technology has the potential to decarbonize unreliable power grids and be a driver to meet climate goals faster.

As previously reported by FXEmpire, the energy consumption of proof-of-work (PoW)  -based cryptocurrencies like bitcoin remains high compared to the proof-of-stake (PoS) consensus mechanism. The report also stressed how central bank digital currencies (CBDC) could adhere to sustainability.

For instance, the Nano network, a feeless sustainable digital currency, uses the same energy output as a single wind turbine.

FXEmpire spoke to George Coxon, Director of the Nano Foundation, on how Nano prioritizes energy efficiency.

Why are sustainability and efficiency integral to Nano, and what are its environmental goals?

I personally think we should all be concerned about environmental, social, and corporate governance (ESG) and make appropriate decisions, whether on an individual or corporate level, to tackle the climate crisis we are now in.

Our goal with Nano is to provide the world with a global, decentralized digital currency that empowers those most marginalized without fees while remaining eco-friendly. In 6 years since launch, over $42 Billion have been processed through Nano without a single fee.

The argument around the energy usage of bitcoin in the cryptocurrency space is not about who is right or wrong; it is fundamentally about progress. If a better solution comes along, you use it – that has always been the case with technological progress through the ages. Arguments around the energy consumed for the bitcoin network revolve around statements such as, ‘it uses renewable energy, so it’s fine’ or ‘It’s fine because the energy being used has already been created’ – this is the creation of a positive feedback loop of support and misguidances.

The defense statements may not be factually incorrect; it doesn’t really matter. My point is that if there is a technology that has burst onto the scene, whether cryptocurrency or not – that is not looking towards a sustainable energy future for the world, then more innovation needs to happen to make it so.

Nano has an energy footprint for one transaction being 0.00012kWh (and is about to be further reduced with a novel new consensus algorithm which is in testing). At the same time, the whole nano network uses the same energy output as a single wind turbine – to put this into perspective, that is 15.5million nano transactions using the same energy as a single bitcoin transaction.

Could you please explain the low-energy consensus mechanism that the Nano network uses?

The Open Representative Voting (ORV) consensus mechanism expands on other designs by providing security with extreme efficiency using delegated, weight-based voting and minimal resource usage.

These improvements result in low costs for handling transactions at volume and thus remove the need to incentivize participation with on-chain rewards. No on-chain rewards equal no transaction fees. On the other hand, participants on the nano network are driven by external incentives, such as helping maintain an instant payment network they can use without fees.

This combination of design decisions – providing lightweight consensus and removing on-chain incentives – avoids other networks’ competitive, energy-intensive activities. The end result is a fast and energy-efficient nano network. Unlike both PoW and PoS centralizing over time, Nano does not.

Colin LeMahieu, Nano’s founder, has spent the last two years writing a new distributed consensus algorithm that is entirely generic, applicable to any use case, written as a pluggable reusable software library (rather than a SaaS platform), and designed for scalability in large, open networks. We look forward to implementing it. It is currently in testing, and this will reduce the network energy footprint even more.

How can central bank digital currencies (CBDCs) be eco-friendly, and what could be the benefits of designing a low-energy CBDC?

It depends on the underlying technology that central authorities choose to utilize, which, as we know, is up in the air.

We happen to be launching our own asset-settlement network, which has been designed specifically for CBDCs (and more). This not only allows for network isolation to geographic areas but also commodity and currency interoperability with a focus on the end-user. At the same time, we are using incredibly low energy, as Nano’s technology is the network’s backbone.

As said before, any new technology, whether financial or not, must be eco-friendly to have a place in the global future.

This article was originally posted on FX Empire