The crypto and blockchain world is booming at a rapid rate. Developments and updates are being made day in and day out. But one thing around which this world seems to be pivoting around is mining, especially for bitcoin.
Here are the reasons why we need to move on from it to find a better alternative to achieve consensus and maintain the network.
Proof-of-Work: The mining algorithm applied at bitcoin’s core is known as Proof-of-Work (PoW). PoW requires the miners involved in the network to solve a cryptographic puzzle in order to get the reward and add the next block in the chain. Miners are essentially nodes who participate in maintaining the network. You can read more about them here.
In order to solve this puzzle, computing power is required. Also, mining rigs cost a lot of money. These rigs are usually kept on by the miners. GPUs, ASIC etc. are integrated into the hardware to gain maximum chances of solving the puzzle and getting the reward.
Now, a large amount of electricity is required to run these rigs worldwide. According to some estimates, the bitcoin network is already using more electricity than the country of Denmark owing to this mining problems. Ethereum, the third largest cryptocurrency in the world in terms of market capitalization, also employs PoW beneath its network.
This extreme use of electricity is very harmful to the environment. Most of the mining electricity produced in China comes from coal and hence, this entire issue is contributing to global warming overall. How do we stop it from hurting our Earth? The answer, find a better and more efficient consensus algorithm.
A Better Consensus Protocol: The need of the hour to devise a better consensus algorithm which does not require this much computing power and is not harmful to our ecosystem in any possible way. Regarding this, different companies are coming up with different consensus mechanisms of their own. While most of them are PoW oriented, there are some unique solutions which are presented forward as well.
Proof-of-Stake (PoS) is one of such alternatives presented forward. Discussions are already revolving around it as Ethereum might shift to it in the future. Instead of solving cryptographic puzzles, it requires participants of the network to stake their money and get rewards according to a certain percentage. But then again, this might incorporate centralization in the network as the people who stake more money will have more chances of getting the rewards.
So right now, the need is to invent and adopt a consensus algorithm that is:
- Not harmful for the environment
When will we move towards deploying such an algorithm in the mainstream crypto network, no idea, but if it is not done quickly, PoW might result in more and more harm to our Earth with each passing day. This one aspect of the crypto world that needs to be highlighted. No matter how valuable people might say the crypto world is, it is not worth it to destroy our planet behind it.