How much has traditional finance depleted the world of its resources and how responsible is it for global warming, the real phrase for what was rebranded as ‘climate change’ by vested parties?
Those in crypto are particularly fidgety when it comes to this subject. Aside from the boring tropes of money-laundering, drug-dealers and gun-runners profiting from crypto’s so-called unregulated decentralisation, the accusation that crypto mining is destroying the planet is another barb that is particularly boring.
As far as the traditional finance world with the woman on the Clapham omnibus and the man on the street and some bloke who runs a trillion-dollar electric car company, crypto is an evil addition to a Marvel metaverse of climate-crypto villains.
The truth, naturally, is somewhat different, and as most of the world’s leaders and expert finger-gluing protestors gather in Glasgow next week for COP26, perhaps it is time to put the record straight.
Crypto companies, as the innovators they mostly are, are very serious about saving the planet and creating new businesses that want the revolution of decentralisation to be matched by green credentials that endorse the permissiveness of their ideas. It’s a narrative that seems to have been ignored by the same vested interests that renamed global warming.
So, what of the question? How has traditional finance contributed to these end-of-planet-days? It hardly needs fact-checking. From the historical production of banknotes over centuries (and the number of trees needed to be destroyed to do so) to the computer power behind apps and websites, it’s truly a no-brainer.
Earlier this week, ex-US vice-president Al Gore told the Financial Times that ‘the global financial systems must be reformed because it facilitates reckless admissions that treat the world’s atmosphere as an open sewer’. No sitting on the proverbial fence there, Al. But he’s right and he has been more than a ‘green, white saviour’ since he left US politics.
Five years ago, things started getting serious about how serious global finance was about green finance. According to the International Finance Corporation (IFC), the total green loans and credits of banks in developing countries to the private sector in 2016 was around $1.5 trillion, or about 7% of total claims on the private sector in emerging markets.
Moreover, the kids (in the developed world) are alright. Their understanding about finance is staggering and that’s not just watching YouTube or TikTok videos about crypto. They refuse to invest in schemes or funds that do not have green credentials and institutions are adapting to this change as much as the same institutions are adapting to cryptocurrencies.
The conversations in Glasgow this week at Cop26 are unlikely to focus on how cryptocurrency can decrease global warming, but they are likely to be incredibly important in the future as knowledge around the sector grows.
Everybody reading this column knows the difference between Proof-Of-Work (energy-hungry crypto mining) and Proof-Of-Stake (creators providing and staking liquidity pools). Everybody also knows that China has banned crypto-mining, but is happy to base its economy on fossil-based energy consumption, particularly coal.
If China was to ban coal with its huge workforce in the sector, the revolution unleashed would make Thatcher’s battles in the 1980s against the UK coaling sector look like local posturing. The country would rebel.
In the crypto world, mining just goes elsewhere, but the real force at play here is that instead of Proof-of-Work blockchains such as Bitcoin and Ethereum, the industry is moving towards a Proof-of-Stake industry where the new chains on the block, as well as FinTech companies, are focusing on sustainability and offsetting their CO2 footprint with carbon offsetting.
Excuse the plug, but as an evangelist for Sienna Network, SiennaSwap and the forthcoming SiennaLend, being based on Proof-of-State is vital to all contributors to the project and reflects personal beliefs.
These beliefs are based on recycling everything, owning as little as possible, using ferries instead of flights and if the railway and electric car networks were as good as they should be, then I’d never fly again… and that is not virtue-signalling, that has been true for a very long time.
There are others doing more than just Proof-Of-Stake in the crypto world. Likvidi is an interesting example. Apparently ‘Finnish for liquidity’, Likvidi has developed an end-to-end digital asset launchpad especially for sustainable finance.
Its Green Bond Launchpad puts each asset’s sustainability and financial information on blockchain. The companies says that this way investors have much better transparency to green investments, where so-called green-washing has been a problem for many years.
Additionally, by turning smaller $10-100 million green bonds into digital assets, these relatively illiquid securities will have more liquidity and improve a fast-growing fixed-income market. Likvidi is also bringing carbon credits to DeFi with tokenized carbon credits called LCO2 (Liquid Carbon).
Investors can also invest in digital assets in the sustainability sector, ‘starting with high-yield green bonds that can yield between 5-12% annually’.
“It is safe to say that the next generation of sustainable financial markets need blockchain to really become green as currently 70% of ESG funds don’t even cover the basic Paris Agreement key points,” said Ransu Salovaara, Likvidi CEO.
Blockchain is already proving to have a huge impact across all financial sectors. Sustainable financial markets need the technology because as a trust system in a world where misinformation runs rampant, smart contracts could, IF enforced properly, could save the world.
Just ask any realistic VC, all of them really know that smart contracts will replace term sheets, so why not global warming promises?
The world is on fire, pathogens are being released from icecaps and forests and we are still in the grip of an evolving pandemic, so COP26 is probably one of the most important conferences to have ever taken place.
Interestingly, it may not be the headline-makers that save the world from its own selfish constructs, but it may be the misaligned-maligned crypto world that will save it from itself, not any bland statements from current-politicians who would rather make money in the private sector.
Crypto is going to save the world; you heard it here first.
Monty Munford is a tech journalist and the Chief Evangelist and core contributor to the Sienna Network project.
He is a keynote speaker/emcee/moderator/interviewer at prestigious events around the world and has spoken at more than 200 global events interviewing figures such as the late John McAfee, Sir Tim Berners-Lee, Steve Wozniak (twice in Beirut and Vienna), Kim Kardashian (once in Armenia), Ghostface Killah, ZZ Top, Guns N’ Roses and many others.
He was previously a weekly tech columnist for Forbes in New York, the Telegraph in the UK and continues to write regularly for the BBC, The Economist, The FT and… City AM.