A common criticism from blockchain detractors is that the process of creating new tokens is energy-intensive. While this may be partly true, it isn’t inaccurate for all blockchains.
Some crypto projects use eco-friendly algorithms, namely Proof of Stake (PoS), instead of Proof of Work (PoW) mining. One such project that uses staking is Cardano
In this guide, we’ll discuss how it differs from its main competitor – Ethereum – regarding energy consumption. We’ll also talk about it operations, pros, and cons.
Is Cardano eco-friendly?
Cardano is eco-friendly, scalable, and sustainable, all thanks to the use of the first peer-reviewed consensus mechanism named Ouroboros.
Ouroboros is a staking mechanism that has proven more energy-efficient compared to Proof of Work (PoW) mining as used on Bitcoin and, currently, Ethereum.
In PoW, the network participants compete to solve arbitrary mathematical puzzles. The first participant to get the correct solution gets to create the next block, and for that, they are rewarded with brand new coins. The other participants don’t get rewarded, and the energy consumed in the race is lost.
In contrast, staking mechanisms such as Ouroboros select block producers at random. The more stake a participant has in the network, the higher the chances of being picked to create a block.
According to Cardano, its consensus mechanism makes it more than four million times energy-efficient than Bitcoin.
Miners are highly specialized devices, making them less useful outside the Bitcoin network. Moreover, these machines always work at top speed, which reduces their longevity. Therefore, most of they’re disposed off rather than being recycled.
Cardano, on the other hand, employs more energy-efficient machines that aren’t as specialized, meaning that they can be used in other applications. Plus, the computers use less energy and generate less heat.
In summary, staking wastes less resources than mining.
Also read: Is BNB eco-friendly?
Is ADA eco-friendly?
ADA is Cardano’s native blockchain cryptocurrency. It is used to transfer value across the blockchain and pay for gas fees on the smart contract layer (once it launches.)
ADA’s operation is eco-friendly since transactions are recorded on the Cardano ledger, which is highly energy-efficient.
How is Cardano environmentally friendly?
Cardano’s blockchain is environmentally friendly in two important aspects:
Cardano uses the Ouroboros staking consensus mechanism, which is millions of times more efficient than networks that use mining such as Bitcoin.
With mining, network participants compete to solve arbitrary math puzzles, and this process is resource-intensive.
Since Cardano’s blockchain requires significantly less computing power to operate, it does not require specialized equipment.
You can use normal computers to validate transactions, and these computers aren’t exposed to strenuously operating conditions meaning they can last longer.
When they become less efficient to use within the network, they can be repurposed, ensuring a longer lifeline. This isn’t possible with mining CPUs and GPUs on the Bitcoin network that have to be despised off once they achieve the length of their shelf-life.
Also read: Is Cardano EVM-Compatible?
What are the pros and cons of Cardano?
It’s much more scalable than some of its counterparties, such as Bitcoin;
The network is peer-reviewed;
Cardano is energy and resource-efficient, making it more eco-friendly;
It’s cheaper to transact on Cardano;
Cardano offers improved functionality as a blockchain compared to most major cryptocurrencies, including Bitcoin and Ethereum.
Cardano’s staking mechanism contributes to network centralization;
The blockchain touts itself as an Ethereum-killer, but still lacks smart contract functionality. So, Cardano will be playing catchup to its main rival.
Which are the most environmentally friendly cryptocurrencies?
Other than Cardano, here’re five other projects that are considered the most eco-friendly blockchain networks:
- IOTA (MIOTA);
- Nano (XNO);
- Fantom (FTM);
- Solarcoin (SLR); and
- Chia (XCH)
Also read: Is Solana eco-friendly?
What makes a currency eco-friendly?
A cryptocurrency is eco-friendly if its creation and transfer within a blockchain network uses little energy and isn’t resource-intensive.
Eco-friendly projects make less use of computing resources, therefore putting less strain on the environment.
Also read: Is Terra Luna Environmentally Friendly?
Is Cardano better than Ethereum?
If you consider gas fees, Cardano, which is much cheaper, will come out ahead. On the other hand, if you consider developer and community engagement, Ethereum will beat Cardaon hands down.
Essentially, what makes one project better than another comes down to subjective factors such as the investor’s goals, transaction habits, technical knowledge, etc.
Which crypto consumes less energy?
There are several cryptocurrencies that consume little or less energy compared to leading networks such as Bitcoin and Ethereum.
What these projects tend to have in common is that they employ the PoS staking mechanism as opposed to using mining to generate new blocks and introduce more coins into circulation.
As such, most PoS coins and tokens use little energy and are considered eco-friendly.
How bad is crypto for the environment?
Cryptocurrencies can be extremely harsh to the environment depending on which mechanism they use to achieve consensus within the network.
Flagship cryptocurrency Bitcoin uses PoW mining which has been criticized for wasting energy. A lot of computing power is dedicated to keeping its blockchain secure.
Critics have also claimed that a majority of the energy is sourced from non-renewable sources of energy such as coal.
On the other hand, proponents claim that a majority of the energy used to mine bitcoin is gotten from renewable sources. The jury is still out on this discussion.
Can you mine Cardano?
You can’t mine Cardano because its blockchain network doesn’t use mining as a consensus mechanism. Instead, it employs staking. If you wish to participate in transaction validation, you’ll need to stake ADA tokens rather than setting up a mining rig.
There are a lot of good things that are introduced by Cardano. As one of the first peer-reviewed blockchain projects, it has implemented cutting-edge technology that makes it more eco-friendly and efficient as a value-transfer network.