Applying Business Sustainability to Crypto

Last week, I approached the topic of sustainability in crypto, particularly at the base layer. As @forexbrokr remarked, this is a topic that doesn't get enough spotlight, and maybe it should.

What Is Business Sustainability?

In my previous post, I didn't define business sustainability. But maybe we should.

If you look at some sources, they define business sustainability in relation to its impact on the environment, community, and society. I feel these days everything is redefined to include at least the first criterion.

Maybe I'm thinking too small, but I think these are some layers that come on top of what sustainability is, at the core: the capacity to keep a business running long-term, regardless of the business cycles, and not become bankrupt.

Note that's not the same as profitability. A sustainable business can operate sometimes at a loss, from the reserves of profit made during its business cycle.

At least that's how I see sustainability, without being an economist or a businessman (other than in crypto).

Impact on the environment, community, and society are important as well for the sustainability of a business. But more important for some type of businesses than for others.

Let's say the business is a nickel mine. Nickel is finite in the mine, so once it's over another deposit needs to be found and mined. And they are finite too. Plus they mean additional investments, permits needed and site to build. The mining operations also affect the local community (both positively - jobs, and negatively - pollution), and this business influences society, because nickel is a major component of car batteries.

How to Apply Business Sustainability in Crypto?

If we take what we said in the above section and apply it to crypto, what do we have?

Let's start from the end. Crypto operates mostly in the digital world, so some of the physical world limitations don't apply.

However, the issue of high electricity consumption of PoW blockchains will always be brought up. So blockchains like bitcoin better do more mining using energy that would otherwise be lost (like they started to do).

For non-PoW blockchains, the environmental impact is minimum, sometimes even zero.

The impact of crypto on communities is already fantastic in unbanked areas, and that will only grow. Eventually, it will be a societal changer.

But the biggest problem for crypto projects is at the core of sustainability, in my opinion: being around for the long term, regardless of crypto cycles.

No tokenomics is perfect. And if when problems are discovered, they aren't fixed, that usually leads to project failures.

Here's where the life duration of a crypto project validates it. One more reason why bitcoin is the top cryptocurrency. The question is: what will happen when the cost for producing a bitcoin block will consistently become higher than the reward received? I'm sure alternative incentives will flow toward miners then.

Hive is doing fairly well on its longevity if we count its legacy. Being in the market for 6 years, and tested hard, shows how resilient Hive is, with the community at its core.

In future posts, I'll dive deeper into this topic, with application to Hive and maybe some of the prominent projects on Hive, to see where we stand from this perspective.

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