Blockchain is a new technology that has the potential to change our world in so many ways. It can lend itself to various applications, such as providing unbanked people access to digital wallets and granting us the capability to establish new and more efficient systems. However, we still need this possible new world to be a place we want to live in.
Bitcoin and Ethereum, currently the two largest cryptocurrencies, both require large amounts of energy in order to function. Blockchains can consume power that is greater than the energy consumption of 159 individual nations. Unsurprisingly, this is a huge environmental problem that is a threat to the Paris climate-change accord.
It may be unintended, but it is unfortunate that there is a huge consequence for such a promising technology. The process of mining takes the brunt of the blame when it comes to the environmental impacts of blockchains and cryptocurrencies. After Bitcoin was created nearly a decade ago, it was treated as a rather niche fascination for the select few who chose to participate, or “miners” as they were called. Since Bitcoin is not governed by any central bank, the network instead makes use of the miner’s computers to verify transactions. This is done by using a computer’s processing power to solve cryptographic problems. Once verified, the transactions are then combined into “blocks” that are then added to the blockchain, a public ledger of all the transactions on the network.
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Through that lengthy process, miners are rewarded with a small sum of bitcoin. The difference right now is that instead of selling for less than a penny back in its early days, a single coin now sells for thousands of U.S. dollars. There are around 200,000 Bitcoin transactions per day, and the number is still increasing, incentivising the creation of mining rigs, often massive computer “farms” dedicated to mining Bitcoin. These mining rigs have spawned in various locations in the world.
Beyond the environmental concerns of having hundreds of high-processing computers operate simultaneously, the emergence of new blockchain protocols that use far less energy has quickly proven the current mining process inefficient.
There is some good news here, though. There are alternatives that can help cut the massive energy costs.
- Green Energy Blockchain Mining
The initial solution to mining is making use of green energy sources to cover the energy costs of mining. There are now several commercial services that offer to power crypto mining rigs using only clean and sustainable energy. For example, an Iceland-based company called Genesis Mining boasts 100% renewable energy usage and is currently one of the largest miners in the world
There should be an incentive to use green energy for future blockchains too. New blockchains can start by offering miners better incentives in exchange for using green energy until, eventually, polluting miners are eradicated. Another solution is to make it mandatory for all miners to provide proof that they are using renewable energy and deny payment to those who fail to do so.
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- Energy Efficient Blockchains
While large cryptocurrencies like Bitcoin and Ethereum are dependent on the energy-inefficient problem-solving protocol known as “Bằng chứng về việc”, a lot of the newer blockchains use a protocol called “Bằng chứng về cổ phần”, which rely on market incentives. Instead of having miners, they have “validators”, people who place deposits or “stakes” on a large amount of cryptocurrency in exchange for being able to add new blocks to the blockchain. In proof-of-stake systems, validators get chosen by an algorithm that takes their stakes into account. This eliminates the need to compete with each other to solve algorithmic puzzles faster, therefore reducing the computing power needed to align with cutting on energy consumption.
One thing that is particularly promising is the Delegated Proof of Stake system, which leans closer to representative democracy. Here, anyone on the network that owns cryptocurrency tokens gets the right to vote which servers get the right to manage the whole blockchain. The Delegated Proof of Stake system has been proven to require less energy while also being faster at processing transactions.
At the moment, Ethereum is working on making the transition to Proof of Stake and hopefully this can be the starting point for other cryptocurrencies to follow. Developers should now think thoroughly before creating blockchains that are centred around Proof of Work Protocols since the more successful they are, the more potential environmental damage they can bring.
Nguồn: Plato Data Intelligence: PlatoData.io
