Zero carbon, fair and emotionless: Recoding the blockchain

Blockchain has been in the spotlight this past year like never before. The utopian vision of a global digital financial revolution, more accessible and fair, that would replace the traditional international financial system has grown exponentially. But this same growth has created a set of problems.

From the intense use of energy and its carbon footprint, to the vulnerability and volatility revealed after the May 2022 Luna crypto crash, and a recent report questioning its decentralization, the blockchain now faces a new set of challenges.

Can blockchain transactions be green, transparent, fair and secure? Some new blockchain startups are saying “Yes.” They are pushing the boundaries to code new innovative algorithms that may just be the future of blockchain.

Blockchain’s Green Energy Problem

Global Investor Group reported on July 6, 2022 the findings of the new study by reg tech firm CUBE. According to the report, regulators are neglecting the environmental impact of crypto mining.

CUBE explored around 15,000 data points from global regulators and issuing bodies over the past four years. Their findings are shocking. While regulators are thinking about the big picture for crypto, with governments and banks leading the way, discussions around crypto sustainability make up less than 0.1% of regulatory issuances.

As climate change mitigation policies become top priorities for all countries, the carbon footprint of cryptocurrencies has come under intensified pressure. The Cambridge Center for Alternative Finance says that bitcoin, with a total annual consumption of 145 terawatt hours, uses more energy than Argentina, a country of more than 47 million people.

If bitcoin were a country, it would be among the top 30 energy users worldwide, the BBC reported. And other cryptos are on the same path. Ethereum uses as much energy as Switzerland with around 62 million terawatt hours of annual consumption.

According to the Bitcoin Mining Council – which only uses voluntarily disclosed data – 57% of the energy used for crypto operations comes from renewable sources, Roland and Berger report.

The new blockchain startup movement

A new movement of tech startups is developing sustainable blockchains. Some of these tokens have feelless transactions as well as faster operation times compared to mainstream crypto. All these startups share common ground. They all agree that the key to a green, fast and decentralized blockchain lies in the algorithm.

Cardano – which runs an alternative to proof-of-work (PoW) – and Nano, a peer-to-peer open source crypto with a very low carbon footprint. Chia, BitGreen and IOTA are also some of the big names of this new blockchain movement.

Another startup in this new trend is the HELO blockchain from NuPay Technologies. HELO claims to have virtually zero carbon footprint and free transaction fees. They also claim to have the fastest algorithm in the world.

TechRepublic spoke with Sarah Robertson, SVP of Operations at HELO, to understand what’s driving the movement and how traditional blockchain operators may evolve.

Robertson said alternatives to the consensus algorithms used in the blockchain need to be explored. Currently, and unfortunately, the blockchain is based on Proof of Work (PoW) networks. PoW models, where thousands of computers compete to solve the next “problem” and forge a block, are the biggest factor in energy consumption.

“It is not possible to simply change the consensus algorithm that is used to work, as all the functions of the blockchain are based on this,” Robertson said. In order to reduce the carbon footprint, the entire industry must switch to adopting new systems.

Like other green crypto alternatives, the HELO blockchain uses a different consensus algorithm to keep energy consumption to a minimum. HELO calls the algorithm Proof of Ethic™.

“Proof of Ethic does not rely on doing heavy mathematical calculations for as long as possible, using expensive hardware,” explained Robertson.

She added that it is combined with several other ingenious computer algorithms and mechanisms, to keep the carbon footprint to an extreme minimum.

A fair and decentralized crypto environment

A recent report commissioned by the Pentagon’s research arm DARPA revealed that the blockchain’s nodes are neither decentralized, up-to-date nor secure.

Nodes are created by participants in the blockchain network. These manage, communicate and verify each transaction. In the HELO blockchain, nodes must follow a strict and structured system of behavior in order to perform various actions related to the decentralized network.

The HELO blockchain algorithm is based on a principle of absolute probability equality. This means that each node, or participant, has an equal opportunity to generate the next block without the need for large capital investments. It is designed to avoid centralization and create an accessible and egalitarian consensus.

As crypto went global, the crypto mining sector industrialized. Massive clandestine crypto mining hubs, crypto operations linked to criminal activities and the use of energy from non-renewable sources became top concerns.

To solve these problems, HELO developed an algorithm where calculation speed does not play a role.

“Purchasing additional hardware will not increase a user’s chances of being rewarded in HELO. Stake doesn’t matter, meaning extra funds held on the blockchain won’t increase a user’s chances of being rewarded, Robertson said.

This new, disruptive and creative approach is designed to make the blockchain more decentralized, and relies on all nodes participating in the network at equal levels. “This means that no group of people can have more control or influence than others,” Robertson assured.

The speed of blockchain transactions

Another point users around the world still struggle with is the time it can take for blockchain transactions to go through. To push a block through on Bitcoin, there must be 1MB of data. This can take two seconds or five minutes.

“For sensitive data transfers or large payments, no one wants to wait and wonder when their transaction will be completed,” HELO said.

But HELO has more than complaints about the speed problem. They claim to have the fastest processing payment algorithm system in the world, running at approximately 6,250,000 transactions per second (TPS).

As a rough example, Bitcoin is capable of processing about 7 TPS, Ethereum is capable of 20 TPS, Solana is normally at 1,000 to 3,000 TPS, and Cardano’s Layer 2 solution—called “the fastest blockchain in the world”— if implemented, in theory makes about 1,000,000 TPS, said Nathan Trudeau, CTO of HELO.

“We believe this will be revolutionary for the industry by providing a never-before-seen capability for a blockchain that users can trust,” Robertson said.

Recoding the blockchain?

The blockchain, cryptocurrencies, NFTs and digital assets continue to grow every day. The technology, which is now global, is out of the bag and is unlikely to return to the shadows of the early days. But from the use of energy to the actual algorithm that runs almost every transaction, the blockchain is far from perfect.

Can the blockchain be recoded? Unfortunately, there is no simple answer to the question. Most of the components, consensus algorithms and mechanisms of the blockchain need to be updated.

“It’s not impossible, but would be extremely complex,” Robertson said.

Like most startups, the HELO community is slowly growing every day, now reaching a few thousand. However, the first cryptocurrencies started the same way, with only a few thousand users.

Is this how the future of blockchain begins? Will startups developing disruptive and innovative crypto solutions become mainstream? Although the answer is unknown, one thing is certain, the idea of ​​a greener, faster and fairer blockchain is attractive.