The XDC Network: A sustainable blockchain solution for trade finance and much more
If we are to positively impact the global environment and avoid the worst effects of climate change, humanity will have to make unprecedented changes to its trajectory.
Some of this will come through personal choices — choices that will likely need to be further incentivized by both governments and the decreasing costs of renewable energy. The electric car market is surging worldwide, and Chinese car makers expect a whopping 70% of the world’s most populous country’s new car sales to be electric by 2030. The price of solar equipment has decreased 89% over the past decade, aided by big growth in the industry, which only facilitates further cost decreases, fueling adoption.
Other changes, perhaps more significant, will come through the transformation of large systems — most notably the power grid. According to the US Environmental Protection Agency, nearly a third (31%) of greenhouse gasses worldwide come from a combination of electricity production, heat production, and energy used in buildings. A green power grid can massively reduce emissions, and as more electric vehicles hit the road, the transportation sector, which accounts for another 14% of emissions, will become more attached to that increasingly decarbonizing grid.
But systemic change goes beyond heating, power, and transportation. While we rarely think about the origins of our energy when we flip a light switch, we almost never consider the processes behind sending capital from one place to another — particularly in trade finance.
The current process of sending capital in trade finance is painfully slow and inefficient, especially across international borders. The largely manual procedures used today are surprisingly antiquated, and they are as complicated as they are risky. Financial institutions are highly motivated to improve efficiency in this process, and to lessen opportunities for fraud.
That’s where blockchain comes in. Blockchain technology holds huge potential in upgrading our antiquated financial systems — including in trade finance. (Want to learn more about Trade Finance? Go here.) But if we achieve greater efficiency and security through a blockchain solution that doesn’t adequately lessen the environmental impact, the industry will have missed the mark at this historical moment.
You may have heard about environmental concerns surrounding Bitcoin. Mining of the dominant cryptocurrency uses over 70 terawatt-hours (TWh) of electrical energy per year — a conservative figure lower than some current estimates. Bitcoin alone consumes at least 0.3% of the total electricity used on the planet. Ethereum, the number-two crypto by market cap, uses around 20 TWh per year — an extremely conservative estimate, even according to members of Ethereum’s community. Both ETH and BTC energy consumption could be significantly higher.
Bitcoin and Ethereum proponents point out that this is only a function of the power grid, and that an increasing number of miners are using renewable energy. Nevertheless, our increasingly green infrastructure will need to prioritize energy efficiency, regardless of the energy source. After all, we already need to accelerate the adoption of renewable energy without adding unnecessarily to the electricity demand. Especially during a decades-long transition period where renewable energy goes from 29% to perhaps 90% of all energy, we must work to reduce our energy use. Fortunately, there are blockchain solutions that can rise to this moment.
The XDC Network is an enterprise-ready blockchain with a hybrid, public/private architecture. Launched in 2018, XDC Network allows a business to easily build or scale its infrastructure within a blockchain ecosystem. Powered by XDC Delegated Proof of Stake (XDPoS), it offers low transaction fees, fast block finality, double validation and enterprise-grade security. From interoperable smart contracts to frictionless payments, XDC Network facilitates a host of use cases. And it’s many orders of magnitude more energy efficient than the two leading blockchains.
XDC uses a negligible amount of energy — over two million times less than Ethereum, and over 9 million times less than Bitcoin using conservative estimates.
The entire global XDC Network uses 7400 kilowatt-hours (kWh), less electricity than the average US household uses each year. Ethereum uses the equivalent of 1.8 million households — almost twice the number of households in Chicago. Bitcoin uses the equivalent of over 6.5 million households — more than twice the number of households in New York City.
Imagine that the XDC Network’s electricity usage represented one basketball inside Madison Square Garden, the nearly 21,000 seat arena in New York. Bitcoin’s electricity usage would more than fill the world’s most famous arena with basketballs.
But there’s more. The XDC Network is not only one of the greenest networks in existence — with full carbon neutrality coming this year. XDC is also one of the fastest and most secure. These qualities have already earned the XDC Network an important place in the digitization of trade finance.
In August of 2021, XinFin’s XDC Network became the first blockchain member of the Trade Finance Distribution (TFD) Initiative, a consortium of trade originators, credit insurers, and institutional funders.
In September of 2021, the XDC Network hosted the first ever trade finance-based non-fungible token transaction, which was completed by United Kingdom-based asset distributor Tradeteq. The asset originator for this transaction was Dublin-based Accelerated Payments, and the trade finance assets were repackaged into NFTs — unique units of data, or tokens, stored on the network.
Two months later, and after several years of research and development for a team of PhD professors (whitepaper here), the XDC Network implemented a major upgrade that brought military-grade security to an already secure blockchain. It also makes the XDC Network more accommodating for a wide range of use-cases and Layer-2 projects, including evolving NFT technologies. The XDC Network is already compatible with the ISO 20022 International Standards in finance, which bodes well for the expanded use of smart contracts on the network..
An Enterprise-Ready Blockchain — For Everyone
XDC is not only a blockchain for institutional players. As an open-source technology, the XDC Network is a solution for anyone who’d like to take advantage of the very best that blockchain has to offer. That’s why XDC Foundation launched Origin, which allows for quick, easy deployment of tokens that uses hardly any energy at all and costs thousandths of a penny for each transaction. Soon, Origin will support NFT creation. For those who want to build more complicated smart contracts on the XDC Network, the XDC Concepts lecture series can get them started.
As part of this campaign to bring the full potential of blockchain to the masses, XDC Foundation recently launched the XDC Observatory, a user-friendly block explorer like no other. It allows users to create accounts, set up watchlists, and browse advanced yet easy-to-understand account statistics.
There are other green blockchains, but the XDC Network is unique amongst its peers. This author looks forward to seeing XDC play its part in the large task humanity has at hand — cutting greenhouse gasses massively and transitioning to renewable energy. Our collective future depends on completing this mission.
The content above represents my own individual perspective as an XDC community member, and does not reflect the official stance of XDC Foundation.
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