This article was first published on Loom Network - Medium
The ecological footprint of Bitcoin is a favorite stick with which to beat cryptocurrencies. When most people do it, it doesn’t wipe 30% off the market cap, but it is a persistent bugbear — mostly because it’s a real problem, and there isn’t a simple solution.
At least, there isn’t a simple solution for the Bitcoin blockchain. But if the idea of needing the energy equivalent of a midsize country to run your blockchain seems like an issue, there is an answer: Don’t use Proof-of-Work.
What is PoW?
Proof of Work (PoW) is the consensus algorithm Bitcoin and Ethereum use to mint new blocks. Computers race to be the first to solve complex mathematical puzzles, and the proof that they have done so is their certificate of the right to mint the block and claim the reward.
When a block is minted on the Bitcoin blockchain, pending batches of transactions on the network are OK’d by the network and added to the blockchain. Bitcoin miners receive 12.5 BTC each time they validate a block — small change in Bitcoin’s early days but US $463,361 at the time of writing. This is how new Bitcoins are made, and why block validation is called mining.
What’s wrong with PoW?
Unfortunately, these puzzles really are very complex. They require huge computer resources to solve quickly. In the early days, Bitcoin was envisaged as a tool for totally anonymous trading: true digital cash. Its inventor or inventors (whoever they are, they’re currently among the richest people alive) doesn’t seem to have foreseen that mining would become an industry of its own, but it has. Blocks aren’t minted on networks of laptops but in giant server centers that threaten the global supply of graphics cards and suck up mostly dirty electricity in China and elsewhere.
Because of the enormous energy costs ...
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Loom Network - Medium