Coinmama, a popular crypto exchange and wallet, recently set its standard for addressing ESG issues in the crypto industry. ESG stands for environmental, social, and governance, a term commonly used to define the financial interests of a company. They are typically concerned with ethical and long-term consequences.
In 2022, UTC Ethereum made its notable transition to proof of stake, a grand moment for everyone, including Coinmama. The success of The Merge is substantially reducing ETH emission rates and has become an essential step in creating a more effective and sustainable financial ecosystem for ETH users. Energy consumption on Ethereum has also drastically reduced. This is a necessary incentive for Coinmama investors interested in ESG investing and can earn passive income without paying any exorbitant gas fees or energy costs linked with ETH. Coinmama will use ESG as a benchmark or parameter to evaluate and predict future performance concerning ESG impact. There are non-financial performance indicators like sustainability, corporate governance, and sustainability are also considered. Still, their prominent role is to ensure systems and accountability to manage Coinmama’s impact, like the carbon footprint of the trading platform.
Cryptocurrencies exist online and are produced by blockchain technology. No individual is controlling the production of these digital currencies. Mining is used to make crypto utilizing a computer to resolve computationally tricky issues. Consumer behavior toward cryptocurrency has changed over time, resulting in a slew of incompetence, abuses, and financial turmoil.
Many believe cryptocurrencies will reduce global corruption and make the delivery of transactions and fund transfers more efficient and transparent. However, the importance of ESG must be noted, along with the impact that crypto has on it. ESG investing is a sustainable way of seeing exponential growth by providing digital capital for businesses like Coinmama, whose sustainability, environmental, and social responsibility values align with their own.
Crypto mining involves an energy-intensive process that jeopardizes the ability of governments to reduce reliance on fossil fuels. It has an environmental impact, but it depends on where the mining is done. For instance, if crypto is mined using hydroelectric power, the carbon footprint will be at minimum levels.
Crypto mining Involves huge energy consumption that has a considerable social impact on both crypto and non-crypto communities. The Ethereum network offers excellent possibilities for social impact like transparency, digital identity, legitimacy, compliance, personal data, protection, and trust, but it also has adverse effects that outweigh the positives. SRI (Socially Responsible Investing) focuses on investments in a user’s portfolio that match his social and environmental values. It excludes organizations that profit from harmful practices opposing ESG criteria. It concentrates on the user’s values above the company’s official procedures and policies.
The lack of regulation for cryptocurrencies like Bitcoin is typically considered an advantage, but it can pose a significant disadvantage too. Crypto transactions do not have legal protection and are mostly irreversible. This makes crypto transactions vulnerable to fraud cases and scams. These lack the necessary legal protection offered by the significant bank-regulated currencies. Another social impact of the decentralized nature of cryptocurrencies is that there is no guarantee of any minimum value. Because of this, the value of cryptocurrencies may reduce significantly depending on market demand and supply and have a significant impact on owners.
Why Proof-of-stake is better than Proof-of-work for Ethereum and Coinmama?
Compared to Coinmama’s previous work models, switching to proof of stake on ETH will significantly reduce carbon dioxide emissions and energy use. According to the Crypto Ratings Council, carbon dioxide emissions and energy consumption have been reduced by almost 99.9%. In September 2022, The Merge led to Ethereum’s transition from proof of work to proof of stake, one of the most popular game-changing events in the crypto industry.
This transition marked a substantial shift that increased the level of security for smart contracts and other blockchain services. It has served as a great example of how crypto and blockchain can be utilized sustainably and maintain their main characteristics of trustworthiness, immutability, and decentralization. Furthermore, other services like Coinmama are also looking towards this successful transition of Ethereum’s proof of stake as an inspiration for developing future environmentally friendly products and services.
Adopting proof of stake has made Ethereum the most energy-efficient blockchain in terms of environmental sustainability and energy consumption. This will allow miners to manage operations effectively, resulting in greater profitability and incentivizing continued development of the platform.
The Negative and Positive aspects of ESG to Consider
ESG, like every coin with two sides, comes with its pros and cons, discussed below.
- Sustainability and returns on investment can coexist – Sustainable funds can bring better returns to a financial company than traditional funds.
- ESG attracts consumers for future growth – Consumers who care about the environment will look for more sustainable products or services from businesses.
- ESG investing aids many positive investment decisions – ESG teams are primarily concerned about good ethics.
- ESG-based companies outperform stock markets – Such companies frequently take calculated risks that reduce investors’ risks, making ESG-based companies more dependable for long-term investments.
- ESG attracts and retains the top pool of talent – ESG can handle overall employee motivation and productivity by providing a sense of purpose.
- ESG can reduce costs – with ESG-integrated practices into a company’s fabric, operating expenses can be reduced over time.
ESG is not an all-encompassing approach – What may work for one organization may not bring the same results for another. Organizations must weave their strategies into daily and long-term practices that make deciding whether to focus on an environmental approach easier.
ESG strategies should work for all aspects, not merely communications – Companies focusing on ESG inconsistently, either as a separate entity from business strategy or brand image ploy, will fail.
No guarantee for consistent market performance – Although there have been some successful events, focusing entirely on ESG strategy does not guarantee consistent market performance.
Difficult to create a diversified investment portfolio – It may be difficult for financial advisors to create a balanced portfolio aligned with long-term strategies for investors who are focused on ESG investment strategies.
Difficult to make detailed performance reporting – Since many ESG factors are not directly linked to financial information, it may take additional effort to fetch measurable performance outcomes. Additionally, a knowledge gap exists between the supply chain and ESG information because of the inconsistent application of reporting frameworks and standards.
Coinmama x Ethereum
Coinmama offers a simple, enjoyable, and safe way of purchasing Ethereum from anywhere in the world. The merger between Ethereum and Coinmama will give users more economic control. Ethereum, also known as the ‘world computer,’ will develop secure decentralized operating systems for applications for Coinmama and other popular platforms.
Although Bitcoin pioneered the crypto movement by enabling secure peer-to-peer (p2p) payments, Ethereum will expand this brilliant concept with dApps or decentralized applications. The success of The Ethereum Merge in considerably lowering ETH emission rates will pose an essential step toward the monetary economics of ETH.
SUMMING IT UP
According to this Coinmama review, with the global acceptance of the transition of Ethereum from proof of work to proof of stake, the Coinmama platform has cemented itself as a significant frontrunner to introduce positive implications based on ESG standards.
This will bring financial benefits to the parties involved and ensure that the ESG environment, society, and governance factors will achieve the planned results. With the Ethereum Merge, Coinmama users will enjoy reduced energy costs, decentralized and trustless systems, low gas fees, and increased security.