The development of cryptocurrency brought us a new era of technology in which digital money could be used for multiple purposes. As fiat money usage decreased in the past years and governments continued to fail their citizens, Bitcoin’s deployment allowed regular people to hold their own coins and leverage control over them while also being entitled to trade them for passive income. Now, learning how to buy Bitcoin on Binance is a piece of cake, as the number of investors expanded with the improvement of these digital assets.
However, despite their benefits, the increasing popularity of Bitcoin and following altcoins led to sustainability concerns. That’s because while buying, selling or trading digital coins has no impact on the environment, mining these coins―a paramount activity for blockchains to provide security, is one of the most dangerous things about cryptocurrency.
For example, Bitcoin mining has become tricky, so miners must invest in heavy computational power and hardware to yield decent results. Consequently, the energy used for mining in a year can be compared to the total Co2 emissions of a country like Greece, which is worrying. If things continue the same way, Bitcoin mining may become one of the leading problems of climate change.
But climate activists, like-minded miners, and developers found a solution: regenerative Finance. Here’s how it works.
ReFi: A better way to finance
Regenerative Finance is an emerging way of operating a digital financial system in a sustainable way. It implies that by taking advantage of decentralized Finance (DeFi) and Web3, miners can contribute to removing carbon dioxide from mining.
ReFi is part of a recent method of mitigating the environment, which is Regenerative Economics, a strategy that pushes the boundaries of capitalism and tries to improve it rather than banish it. This system can be understood by approaching regenerative agriculture, circular economy models, the use of renewable energy and new regulations on social and economic integrity.
Investing in ReFi usually means prioritizing clean energy projects and blockchain-based businesses that support eco-friendly initiatives in agriculture, Finance and other vital industries.
ReFi takes into account the following:
- Multinationals need to approach a more ecological way of conducting their usual activities by intruding sources of renewable energy and being mindful of environmental sustainability;
- Companies should consider their impact on society and acknowledge socioeconomic disparities by ensuring their access to affordable education, healthcare and jobs;
- Financial institutions have to have a long-term strategy regarding their approaches so that the entire economic system is prepared for unforeseen situations;
- Businesses need to abide by essential rules of being accountable and transparent with the world regarding their sustainable practices;
- The entire community should be encouraged to engage in sustainable acts and contribute to adopting better values;
How ReFi makes a difference in our economy
Taking advantage of ReFi basically means investing in and supporting green initiatives with cryptocurrency with the use of Web3 and DeFi platforms. Technologies like decentralization, smart contracts and tokenization cooperate with DAO structures, allowing investors worldwide to allocate funds to specific initiatives.
A regenerative system significantly differs from conventional ones because it serves citizens and the planet while prioritizing business. Hence, it strengthens the bond between a country's society, environment, health and financial condition.
That’s why Web3 is an essential aspect of regenerative Finance because it provides accessible user-focused digital products and services with the help of renewable energies. This ecosystem leverages the development of DeFi applications and blockchains that mitigate similar aspects of sustainability and green practices.
ReFi and the use of green cryptocurrencies
ReFi encompasses the entire financial system, so cryptocurrencies are included. But considering most of them are a problem to the environment with the current maintenance scheme, some developers gathered their forces to deploy green cryptocurrencies that use better practices. Here are a few examples:
- Chia involves the use of hard drives that can be used through software for a more accessible and less-energy-consuming mining alternative;
- IOTA does not rely on traditional mining but rather on operating on small devices that maintain the network;
- Cardano is based on an innovative proof-of-stake consensus mechanism, Ouroboros, which requires users to buy coins upon entering the network;
- Solarcoin promotes the use of solar energy by offering coins as a reward for users who use solar energy to create megawatts;
There are numerous emerging green cryptocurrencies that rely on sustainable ways of maintaining their networks and keeping users engaged instead of traditional mining. Hopefully, this trend will continue, and coins like Bitcoin will have less of an impact on the environment.
ReFi is much more than green crypto and sustainable initiatives
Regenerative Finance has been found to be the base of many innovative projects that contribute to a better economic system. While some are still in trial, others have already been established in different areas, ensuring outstanding results.
One example is UBI, or the universal basic income, which is the idea of ensuring all people within a city or country have the same income despite background or education. UBI can be a great initiative in some places because it provides all people a financial safety net by covering basic needs and a decent living standard.
Another way of helping communities is creating local currencies that support small businesses, create more jobs and develop an area. This is based on regenerative principles because it encourages the development of such projects by rewarding locals’ interest.
Finally, one of the most remarkable efforts includes natural capital-backed assets that take one natural resource and link it to a specific financial value. It is an excellent way for companies to fund green projects. For example, carbon and biodiversity credits are already employed and have a roaring success.
What’s your take on ReFi?
Regenerative Finance is the future of our economy, and we’re here to see its impact on the environment. This new strategy aims to create more sustainable economies by employing the protection of societies and the elimination of economic disparities and also bringing in innovation with green cryptocurrencies and taking advantage of blockchain and Web3.