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Neutral to Negative Carbon Footprint, how Algorand is Leading the Race for Sustainable Blockchains


Since their creation, crypto-currencies have been criticized for being energy and resource intensive. In a way, this criticism is quite legitimate, and many projects were then launched positioning themselves as solutions to this sustainability and scalability problem. Some have innovated in their consensus mechanisms, others in their hashing algorithms. But in the end, these improvements came at the price of sacrifices, and it then seemed impossible to develop a blockchain project that was both scalable, decentralized and secure.


 

However, with its new approach to improving the current model, the project led by Silvio Micali has achieved the feat of proposing a viable, nearly carbon-neutral blockchain system without sacrificing security and scalability.


Just like many blockchains before them, Algorand uses Proof-of-Stake consensus mechanism to validate the next blocks in the chain. This removes the need to use processing power to elect the next network validators and therefore saves a lot of energy in the process. Unfortunately, the current implementation of this system is not without its problems, particularly its impact on the decentralized nature of the projects that use it.


Algorand, in order to remedy this problem, initiated an alternative version of Proof-of-Stake which they named Pure Proof-of-Stake. All users can be selected to participate in the consensus; the probability increasing proportionally to the amount of funds of each individual. This eliminates the need to block funds in order to obtain validator status, which is a barrier to entry for most people. In addition, the function of random selection is run locally by the node, securing the network against actors seeking to corrupt validators and saving resources.


The amount of energy required to run a network node is low, and it can be achieved with a device as small as a Raspberry Pi. In comparison with other blockchains, Algorand's digital asset creation and transactions emit significantly less CO2, with preliminary data indicating a reduction of about 2 million times.


But to make a real point about its ambitions, Algorand partnered in 2021 with ClimateTrade, a company that aims to help businesses achieve carbon neutrality through the use of blockchain-based services. This initiative will help Algorand to achieve carbon-negative network status through the implementation of a sustainability oracle notarizing the carbon footprint of each block. The equivalent of the measured amount will be stored in a treasury as carbon credits so that the protocol keeps running as carbon-negative.


As such, not only does Algorand adopt a very ecological approach within its protocol, but also a concrete carbon credit system that allows the company to have a significant positive impact on its environment.