This article was first published on Insights – Ripple
Block Stars is a podcast series where Ripple CTO David Schwartz meets blockchain’s most innovative and impactful thinkers. In the latest episode, David talks with serial entrepreneur Sid John Leopold about the environmental impact of blockchain technology and what it means for the future of money.
In a 2017 academic article, Sid analyzed the eco-friendliness of various payment methods, including the U.S. dollar, Visa, Bitcoin, and XRP. Though he already knew that Bitcoin mining is an energy-intensive process, the scale of its consumption was a shock.
“Bitcoin uses more energy than whole small countries, for example, Iceland and Syria,” explains Sid. “We are talking about massive amounts of energy. Compared to the biggest [tech] companies…that…have hundreds of thousands of servers around the globe, they are not even using 1% of what Bitcoin is using when it comes to electricity.”
Yet even more surprising was discovering that another blockchain-based currency, XRP, uses less energy than both the dollar and Visa. For Sid, this was a critical insight as it demonstrated that XRP’s consensus protocol provided a viable alternative to Bitcoin’s extremely inefficient proof-of-work system. XRP shows that digital assets can be useful and sustainable, especially when they make money move faster.
“I view cryptocurrencies [as] tools of innovation with the potential to make the world economy more efficient,” he says. “Most of our money today sits idly either waiting for instructions in Nostro accounts or in transit. The only time money is really useful in the real economy with real people creating real value is when money is exchanged for goods and services.”
This characteristic of money means that how fast money moves from one person to another is extremely important. A payment in transit doesn’t benefit the sender, who may not receive the goods or service ...
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