If you’ve been researching how your brand can harness the opportunities presented by Web3 and the blockchain, you’ve almost certainly come across references to Proof of Stake and Proof of Work.
You might have been tempted to skip past the technical detail, but the difference between the two terminologies is vitally important for the Web3 community, especially when it comes to sustainability. And here’s why.
Reality+ is committed to managing environmental impact as an integral part of our operations. In 2021 all companies should be doing this, regardless of the industry in which they operate. In particular, it is our policy to ensure the environmental integrity of our processes and facilities at all times.
Unfortunately, Ethereum, like most major cryptocurrencies, was originally built on a system called ‘Proof of Work’, which is incredibly energy hungry. Proof of Work was vitally important, however, as it acted as a security system for cryptocurrencies like Ethereum and bitcoin, where no third party, like a bank, oversees transactions.
To keep financial records secure, the Proof of Work system forced stakeholders to solve complex puzzles using energy-guzzling computational tasks. The process was incredibly energy inefficient on purpose. The idea was that using up huge amounts of electricity — and probably paying a lot for it — makes it less profitable for someone to try and hack the ledger.
At Reality+ we quickly saw the downside of using the Ethereum mainnet and Proof of Work, so very early on we ‘hardforked’ to run our services on what’s called a sidechain. This gave us the benefits of security and digital ownership, while avoiding a lot of the environmental impacts associated with Proof of Work.
We were ahead of the curve in that respect, as now the market has caught up, which is good news for everyone. In September the Ethereum network finally completed its upgrade from a proof-of-work mechanism to proof-of-stake.
Essentially this means that instead of having to pay for huge amounts of electricity to be part of the network, miners instead have to lock up some of their tokens in the network to ‘prove’ they’ve got a ‘stake’ in keeping the ledger accurate. This gets rid of the need for computers to solve complex puzzles, which, in turn, gets rid of emissions from electricity usage.
The upshot is that the Ethereum mainnet’s electricity consumption dropped to almost zero literally overnight.
And that’s super important for your brand as it takes its first steps into the world of Web3, with the assurance Proof of Stake will give to both internal stakeholders and fans when it comes to the sustainability of your products and services.
What’s even more encouraging is that there’s so much more we can all do, in addition to using Proof of Stake, to reduce the impact of Web3 operations on the environment still further.
At Reality+ we are actively engaged with international initiatives to not only help completely offset the carbon footprints of our partners, but to help them prove their environmental credentials in an independently audited and fully transparent way.
We’ll be covering this off in more detail on the blog soon – but to find out more in the meantime, simply contact the Reality+ team here.