Are carbon offsets the key to green cryptocurrencies?

Abstract

Cryptocurrencies have seen a meteoric rise in their adoption and value over the past decade. For instance, the most widely-traded cryptocurrency, Bitcoin, which started at only a few cents per token in 2009 when it was first mined [1], crossed an all-time high price of more than USD68,000 in November 2021 Largely made possible with the rise of blockchain technology, a cryptocurrency is essentially a digital form of money that allows the transfer of value directly between users, without requiring an intervening financial institution A blockchain is a system where records of transactions are distributed across multiple users in a network as encrypted 'blocks ' [1,3,4]. The users in a blockchain network participate in both the creation of new tokens (equivalent to 'minting' new money), as well as the authentication of these records through complex mathematical operations on their computers, which is referred to as 'mining ' [1]. This decentralized 'distributed ledger' prevents the false modification of records [3] and allows for a more secure, trustworthy and scalable way to make financial transactions These advantages have led to significant growth in this sector.