On June 9, the International Monetary Fund (IMF) took a big step forward by suggesting the creation of an eco-friendly payment system. It performed energy consumption research based on the consensus processes of several cryptocurrencies in the ecosystem.
The high energy consumption of cryptocurrencies that use the Proof-of-Work (PoW) consensus process means that they are no longer anonymous.
Additionally, the method offers significant environmental risks owing to the release of carbon-containing vapours. As a result, the health risks associated with token mining have increased the inclination for crypto assets that use a non-PoW process.
According to the IMF, each crypto currency has its own design components that affect its energy usage. As a result, the IMF wants to utilise the Digital Currencies and Energy Consumption research to map out the optimal mechanism fit for the creation of CBDCs (Central Bank Digital Currencies).
Furthermore, the IMF examined the important policy on the impact of digital currencies on the eco-friendly environment. It proposed that developers avoid the PoW protocols.
The fund compared the energy efficiency of several non-PoW protocols to the existing banking system. It scored the former higher, indicating that non-PoW crypto apps are appropriate for customers due to their basic design structures and payment mechanisms.
According to the organisation, Bitcoin is a popular system that employs the PoW technique. However, BTC is predicted to use around 144 terawatt-hours of energy every year (TWh). Through its scalability solution, the protocol may reduce its energy costs for each transaction. However, its overall energy usage would remain high.
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