The invention of bitcoin marks a turning point in the 39, history of finance. Through its decentralized emission mechanism, mining, Bitcoin has been able to restore the financial freedom to users, ensuring that no transaction can be censored or canceled by some thirds.
Moreover, Bitcoin put money in the hands of people, rather than in a centralized entity. This has allowed Bitcoin to prosper as a global, apollitic and valuable currency, immune to external factors that would undermine its value and effectiveness.
The mining industry is not good, however
However, as it is common with technology, when a problem is solved, a another arises from the solution. This is the case of Bitcoin mining, a once harmless practice that can be carried out from any ordinary desktop computer. According to data from the Global Cryptocurrency Benchmarking study of the Cambridge Judge Business School, the industry is now estimated at 288 megawatts.
The continued growth of cryptocurrency extraction not only affects our environment. night also crypto-currencies favoring centralization and industrialization. Regular users can not hope to become miners themselves without a large investment, specialized facilities and equipment and a considerable level of technical knowledge and experience.
For simplicity, the process of issuing Bitcoin currency is no longer in the hands the number, but is reserved for a few key players. These gigantic miners keep all the incentives and have all the power on the network.
So, what should we do? The mining of work proof is seen by some as an indispensable part of the cryptocurrency ecosystem, acting as the "only" anti-Sybil mechanism foolproof able to maintain networks such as Bitcoin safe . Others will argue that alternative methods can lead to the same, if not better, results without the need to abandon security or decentralization in the process.
Today, let's take a look at some of the less popular alternatives to digital mining. Some of them can help reduce or end the centralization of Bitcoin mining and the environmental devastation that is left in its wake. We will talk about alternative energy sources, new consensual mechanisms and innovative implementations of Proof of Work.
In 2016, the BBC revealed that 70% of Bitcoin haschrate China. Unfortunately, the vast majority of the country's electricity is produced by burning coal, which gives one of the largest carbon footprints in the world. Despite recent efforts by the Chinese government to stop coal energy projects, the "dirty black rock" is still being burned throughout the country. From industrial boilers to homes, coal generates more than 75% of the national electricity.
It has become clear that as long as mining will remain profitable, more mining computers will connect, consuming even more energy. The long-term solution may not be based on other mining methods, but on the source of electricity itself.
As electricity needs continue to increase for miners, miners will likely start turning to renewable sources of energy. HydroMiner, for example, is a cryptocurrency operating company using hydropower plants in the Alpine region to power its mining operations. Known as one of the most efficient and clean energy sources, electricity generated by hydropower emits only 5 to 10% of the CO2 emitted by the company. 39 conventional fossil energy.
Using hydropower, the company pays less for electricity. In fact, the cost of the company's electricity is actually 85% lower than the average European price, which makes it competitive with China.
Since wind and solar energy does not produce stable energy, hydropower seems to be the most appropriate power supply for the exploitation of digital currency . Hydropower generates a large amount of electricity without significantly depending on weather conditions, airflow and complex start-up processes. Operating and maintenance costs are generally low as these procedures are almost fully automated and require no fuel.
Proof of Participation
Proof of work is not the only way to make a digital currency work. An alternative consensus mechanism, called Proof of Stake (PoS), relies on a process called "forging". Each user can "implement" their currency and have a chance to be selected to forge a block and earn more currency. Those with more currency are more likely to forge blocks.
The concept is simple: the more coins you have, the more coins you earn. In its application, however, Proof of Stake is much more complicated and comes in several variants.
Although opinions on these issues vary, it is hard to ignore the benefits provided by mining stake providence, the most relevant of which is the lowest consumption of energy. energy. PoS also allows anyone to participate in the network without special hardware or technical knowledge, since all they need is to let their digital money wallet / node work.
In terms of security, Proof of Stake also offers some less than obvious benefits. For example, a minor of Proof of Work must invest in equipment to extract coins. This normally means that he has a direct interest in the well-being and success of the network. However, the current landscape of cryptocurrency allows miners to use their equipment profitably on other parts, especially when it comes to extraction by GPU.
Proof of Participation requires the user to purchase coins to participate in the network, ensuring that his mining power can not be used elsewhere. In terms of security, this avoids some attacks, since the disappearance or disruption of the current cryptocurrency would result in a loss of investment for the malicious actor.
In the world of Proof of Stake, several different implementations have been created. The Waves platform, for example, uses a Rented Profit Proof system in which miners can "rent" their tokens to full nodes to generate revenue without having to host their own nodes. A similar approach is used by DPoS cryptocurrencies that vote on delegates to generate blocks and vote on important decisions.
Systems similar to those used in work proof cryptocurrencies can also be implemented.
Another viable alternative is mining through the use of smart contracts for Ethereum-based tokens (ERC-20). This system obviously depends on the security of the Ethereum Blockchain which, for the moment, is provided by an extensive network of miners from Proof of Work. In the future, Ethereum will switch to a PDS system
Minereum, for example, is an Ethereum-based token that uses a system of smart contracts to issue and distribute tokens without having to adopt a system. proof. Their announcement reads:
"Minereum is the first-ever Smart Contract Token auto-mining.The parts are generated on the fly with a mathematical formula."
Despite its extreme attractiveness, this practice still depends on the integrity of the Ethereum block chain, which itself runs on a work proof system. Nevertheless, this is an important step towards a more sustainable mining industry where utility tokens can have complex emission schedules without having to resort to their own independent blockchain and costs. associated energy.
Delayed Proof of Work
Delayed Proof of Work (DPoW) is a relatively new concept in the world of cryptocurrency mining. DPoW allows any cryptocurrency to be as secure as Bitcoin without the need for a large network of minors to protect it.
Delayed evidence of work relies on a secondary network of notary nodes to provide this enhanced security mechanism. . Notary nodes take Blockchain Block hashes from a currency and insert them into the Bitcoin Blockchain by doing transactions. At the same time, information about the previous blocks stored on the Bitcoin blockchain is constantly checked by nodes to guarantee the currency network.
By buffering block hashings of "weaker" cryptocurrencies on Bitcoin Blockchain, these become resistant to previously open attack vectors where a malicious actor with large amounts of hash power could disrupt the network by "rewriting" the information on it. By timestamping block hashes on the Bitcoin Blockchain, they become as immutable as Bitcoin itself and allow the notarized nodes to identify the attack attempt.
Although the extraction on these chains is done via Proof of Work, -Demand block generation process. Another concept developed by the developer DPoW "Jl777", the generation of blocks on demand, ensures that blocks are extracted only when a transaction needs to be processed. This reduces the computing power sent by the miners and the storage requirements for the nodes. Polycryptoblog, working with J1777, explains:
"On-demand block generation saves energy on its own Blockchain while dPoW makes the Bitcoin Blockchain more energy efficient. A transaction is detected in the mempool, the process of exploration starts.This saves energy on many fronts, the cores of processors are inactive when they are not mining, this is which is comparable to the evidence of the issue.This also leads to smaller Blockchain sizes due to the lack of empty blocks, which reduces the synchronization time and saves space and time. 39; electricity. "
Proof of useful work
This is a concept that has been explored in the past by projects like Gridcoin and FoldCoin. By adding an incentive layer in the form of cryptocurrencies, these projects allow users to "extract" coins while contributing to good causes such as medical research and climate studies. . This can be considered one of the first examples of useful PoW.
Another currency uses the "Useful Work" system in which the computing power is replaced by the storage space. Their white paper reads:
"We propose a useful working consensus protocol, where the likelihood that the network will elect a minor to create a new block (we call this the voting power of the minor) is proportional to their current used storage compared to the rest of the network.We design the Filecoin protocol so that the miners prefer to invest in the storage rather than the computing power to parallelize the mining calculation. storage and reuse calculation to prove that data is stored to participate in consensus. "
We usually love to pack items like these in a pretty little package where we draw some sort of conclusion or solution from the analysis conducted. However, the truth is that we do not really know what the future holds. When Satoshi Nakamoto wrote the white paper on Bitcoin, he did not envision ASIC mines or mining basins, and he certainly did not envision a 288 megawatt mining industry.
Nevertheless, if the need is the mother of the invention, a clear need for an alternative to the current standard. Weather is the sources of green energy explored by HydroMiner, an implementation of Proof of Stake, or something else entirely, one thing is certain: the current scenario is not sustainable.