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The global Covid-19 pandemic has accelerated change in the way we think about money and spurred a dramatic increase in digital payments, which are expected to rise by 15% this year alone, as consumers seek faster and more accessible payment solutions. . As digital payments become more widely adopted, the financial technology (fintech) industry has the opportunity to drive global finance towards a more sustainable future.
As cryptocurrencies and blockchain become more pervasive, it is important to be aware of the potential negative environmental impact of these large-scale technologies. As is well documented, the energy consumption and carbon intensity associated with existing transactions are enormous. Traditional finance also carries a substantial carbon footprint.
Furthermore, it is no secret that the cryptocurrency mining process consumes large amounts of energy. Portugal, for example, consumes 1 billion kilowatt hours (KWh) of energy per year, while 60 million bitcoin transactions consumed around 29 billion KWh in 2019 – or 2.3. billions gallons in fossil fuels.
Fintech innovators to take the lead
Fintech leaders have an unprecedented opportunity to leverage the relatively early stages of blockchain and cryptocurrency industry development to build – and design – a more sustainable future for global finance now. As natural innovators, fintechs are well positioned to lead in making carbon neutral finance a viable reality.
As with any complex system, it will now be much easier to create a sustainable blockchain ecosystem from scratch than to “reverse engineer” it at a later stage of growth. Independent research shows that now until 2023 will likely be the most critical years for the growth of cryptocurrency adoption, including BTC, ETH and XRP, so it is important that financial technologies such as blockchain and cryptocurrency are green and address the growing load. environmental as the future of finance.
Traditional finance is already moving to reduce its collective impact on the climate. Well-known investment firms such as Blackrock encourage clients to rethink their investments by offering sustainable products and engaging with companies on climate-related risks and opportunities. Similarly, the Rocky Mountain Institute recently launched the Center for Climate Aligned Finance, which includes pledges from Wells Fargo, Goldman Sachs, Bank of America, JPMorgan Chase, and others.
Ripple’s commitment to achieve net zero carbon by 2030
With a global consensus emerging on the need for urgency across all industries, Ripple is acting with a commitment to achieve net zero carbon by 2030 through a combination of emissions reductions, carbon offsets and investments in innovative technology. carbon removal.
To truly drive a sustainable future for finance, Ripple has also partnered with the Energy Web Foundation to co-create EW Zero, a new open source tool that will allow any blockchain to decarbonise through the purchase of renewable energy in local markets. Worldwide.
The XRP Ledger, which Ripple leverages for its inherently green design, is already using EW Zero to purchase clean energy, making it the first major zero-emission blockchain. With XRP expected to grow to $ 750 billion in transaction volume by 2025, this commitment to achieving zero carbon speaks volumes when it comes to the impact on energy savings.
Widespread adoption of green practices within the blockchain industry and global finance won’t happen overnight, but it is imperative that business leaders take responsibility for reducing energy consumption. The alternative – watching as a new technology charges a large and unclean energy bill – is unacceptable and unsustainable.
Together with clean energy innovators and global financial decision makers, fintech can introduce sustainable measures to secure our green digital future and help meet global emissions targets by 2050, the sustainability goal set for the world. from the Paris Agreement.
