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Blockchain: Making Crypto More Sustainable
Blockchain solutions have been criticized because of the huge amount of energy needed to power the currencies. Bitcoin alone consumes 150 terawatt hours of electricity annually — the same amount used by all of Argentina, a country of 45-million people.
Proof of Work. Bitcoin is the original implementation of blockchain and is based on the concept of “Proof of Work” which is a technique to verify the accuracy of transactions that are added to the chain. The ‘work’ component is a non-trivial amount of computation often called ‘mining’ that needs to be performed to solve a challenging puzzle which is then validated by others using the blockchain. Proof of Work has been particularly inefficient in the amount of energy needed to perform it. Many of the 15,000 cryptocurrencies that exist are based on Proof of Work.
Proof of Stake. An alternative to Proof of Work is “Proof of Stake”, a concensus technique that requires users to hold a stake of the coins. The approach has been found to be much more computationally efficient, more secure, and also allows transactions to be performed more quickly.
Bitcoin continues to use “Proof of Work” while Etherium was originally “Proof of Work” and plans to ultimately migrate to “Proof of Stake”, using something called the Beacon chain.
Considerable amount of research is now underway to make blockchains more efficient. Researchers in China suggest that rather than waste computational cycles with “Proof of Work” on trivial puzzles that the work performed would be to solve a useful problem, like optimal energy distribution. They suggest naming this approach “Proof of Solution”.
Numerous other alternative methods have also been proposed: “Proof of Capacity”, “Proof of History”, and “Proof of Elapsed Time”. The security and viability of these other methods need to be validated, but if feasible, these methods could be significantly faster and environmentally sustainable.
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