Towards an Eco-Friendly Consensus — Making Ethereum Sustainable
Envisioned by wunderkind Vitalik Buterin in 2013, Ethereum truly changed the game for cryptocurrencies the moment it came into being. The second largest cryptocurrency by market capitalization, Ethereum’s biggest selling point is that it features smart contract functionality. After Ethereum was created, blockchains were no longer limited to only providing a means of payment. They could do so much more.
With a native Turing-complete programming language, the Ethereum blockchain allows users to deploy decentralized and immutable applications. A range of recent innovations within the Ethereum network, from decentralized finance to digital collectibles, have brought in new users at a rapidly increasing rate. In terms of its position as a major cryptocurrency, the future of Ethereum has never looked brighter.
That said, the Ethereum ecosystem has not been without its costs. As a proof-of-work blockchain, every node must process each transaction. This reduces the scalability of Ethereum and requires an enormous amount of electricity usage.
To use the Ethereum blockchain, users must pay a ‘gas fee’ which rewards miners for verifying transactions. As applications within the new field of decentralized finance mostly use Ethereum, gas costs for the network have climbed to over $20 as of summer 2021.
In addition to being costly, proof-of-work also comes with a heavy environmental burden. At 81 ThW, Ethereum has roughly the same carbon footprint as the entirety of Chile; combined with Bitcoin, Ethereum currently produces approximately .02% of Earth’s total CO2 emissions.
And yet Ethereum may become the first eco-friendly cryptocurrency before its major rival Bitcoin. Firstly, many layer 2 scaling solutions such as Polygon are being adopted to improve the user experience for Ethereum. Secondly, the planned transition to a proof-of-stake consensus mechanism could reduce Ethereum’s carbon footprint by as much as 99.95%.
The August 2021 London upgrade that would achieve this massive reduction in its carbon footprint moved Ethereum closer to ‘Ethereum 2.0.’ This planned upgrade — thanks to a feature known as EIP 1559 — reduces the fees for Ethereum transactions and offers a milestone for Ethereum’s transition to proof-of-stake.
However, this change to Ethereum 2.0 isn’t scheduled until early 2022. Nevertheless, the London Upgrade, which is Ethereum’s most important upgrade since 2015, readies Ethereum for its move to the more eco-friendly proof-of-stake. Reaching the goal for Ethereum to become a sustainable cryptocurrency is just around the bend, and could once again prove that Ethereum is more than just a second place rival to Bitcoin. It may well establish Ethereum as the cryptocurrency that will set the foundation for how its rivals adapt and expand their functionality in the future.
