Blockchain’s main use is still being the technology that is behind the hundred of cryptocurrencies that exists out in the digital markets. It is even seen as a sort of new revolution that some experts compare to the internet breakthrough back in the 90s.
But even if this distributed ledger technology provides a friendly environment where cryptocurrencies can spring up and develop, it also has its counterparts, precisely in the management of keeping up a healthy and always growing blockchain.
The blockchain miners
One of the main hazards critics tell about blockchain based cryptocurrencies is the way it has to be “mined”. This is a process where people, using their real computers create crypto “coins” through sorting out algorithm problems. Solving these complicated algorithms within the blockchain requires huge amounts of electricity.
For the two major crypto coins out there, some say that Bitcoin guzzles about as much electricity annually as all of Nigeria. Ethereum gulps electrons too, as do most other cryptocurrencies.
The so-called miners are the people that “mine the coins” out of the system. They are the ones that make sure the blockchain is well followed through and no shortcut is taken by the crypto developers. They also have to check the blockchain status and see if any of the new ledgers have been added according to the network rules using an algorithm called a.
When the process is over, they get a bitcoin/ or any other cryptocurrency in exchange for their work. The problem is that the hundred of computers that have been working on that have sucked tons of electricity.
How the mining process spends electricity
Following that matter, Technology Review expert Mike Orcutt sees two major tasks that requires the most of the energy in the “mining” process.
In the first place, when the cryptocurrencies miners have to add new lists of transactions—the blocks—to the chain. This is done to secure the blockchain from attacks, but it is precisely what really guzzles electricity.
On the other hand, it is the complex of the blockchain algorithm itself what requires millions of reckoning done by the computers in the network.
A wider explanation would be that the miners must transform each list of most recent transactions into a digital signature that can serve as proof that the information is true. All miners can do this, using a cryptographic tool that takes any input and spits out a string of seemingly random characters.
The goal is then to be the first one to determine a very specific signature based on three inputs: the signature of the preceding block, the list of new transactions, and a random third number. Since miners don’t know the third number, they must generate digital signatures repeatedly until one guesses correctly.
Mike Orcutt explains that this again, uses an immense amount of energy, signalling to the rest of the network that a miner’s accounting can be trusted.This last process is exactly what really gives security and a proper decentralized trait to the blockchain. Th This particular method of reaching agreement—known as “proof of work”—is the most established but it needs huge amounts of electricity due to its complex nature. It is safer indeed but not environmentally friendly, at all.
To sort this oncoming issue, there are alternatives rising in some new cryptocurrencies to upgrade somehow this proof of work.
The ‘proof of stake’ will save time and energy
The one in the best position to supplant proof of work is called “proof of stake.” “Whereas proof of work rewards participants for spending computational resources, a blockchain based cryptocurrency that uses proof of stake would select validators based in part on the size of their respective monetary deposits—their stake. This would be massively more energy efficient, but the concept is still unproven at a large scale and has a number of kinks that need working out,” according to Mr. Orcutt.
Still, if all goes as planned, Ethereum will transition to proof of stake relatively soon, perhaps as early as the end of this year. That would be hugely impressive, given that its creator Vitalik Buterin has called devising an effective consensus algorithm “one of the hardest problems in cryptocurrency development.”
‘Farming’ instead of ‘Mining’
On the other hand, there is the Chia’s “proof of work”. This system solves security concerns in proof of space by supplementing its blockchain verification with proofs of time. In short, in the model that Cohen proposes in Chia, the same level of security can be achieved while using less electricity. It is thoroughly explained by BitTorrent inventor Bram Cohen here.
According to Mr Cohen, the Chia method would swap the “mining” concept for “farming”.
Basically, when a new block is mined it propagates rapidly to all full nodes and these farmers start working on top of it. When a farmer finds a new block they publish it to the network. Here it goes how it works.
“Farmers all find the best proof of space they have. The three best proofs of space rapidly propagate through the whole network and proofs of time servers start working on top of them. When a proof of time server finishes the proof of time for a proof of space it publishes the whole thing as a fully validated block and publishes it to the network to be built on top of again.”
Seeking out the green blockchain
These two options focused on how to improve the time and energy needed in the proof of work process but they are still in an incipient stage of implementation. However, they represent a true effort about looking for an environmentally friendly way out for the blockchain, which was stuck in their own computational problems.
So far, for now, the reality is that we are probably stuck with energy-guzzling cryptocurrencies, at least for a while. In the meantime, maybe true believers would be wise to invest their digital coins in renewable electricity sources.
Thought leadership series on new trends and blockchain, powered by Humaniq.
Launched in 2016, Humaniq aims to provide mobile finance to the 2 billion unbanked population through its mobile app for good, that uses biometric authentication to replace traditional methods of ID and security. Humaniq’s open source stack and API will be available for startups and other businesses to build services on its core technology, making it easy to adapt their service and plug it into Humaniq’s network to reach a huge, untapped audience.
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.