Introduction
The consensus algorithm used by any blockchain project is often open to debate with regards to its impact on the environment. One of the algorithms made popular by bitcoin miners is the Proof-Of-Work algorithm. The major drawback of this algorithm is its high energy consumption which many critics of Bitcoin mining will always worry so much about. A lot of solutions have been proposed and now, Paypal has an idea too.
More BTC to greener miners
Paypal has put forward a rewards-based solution to the high energy consumption by Bitcoin miners. The main goal of this idea is to encourage and reward bitcoin miners that use sustainable energy sources. Instead of connecting to the main energy grid and causing more harm to the environment, bitcoin miners are to use greener sources like solar installations to power their mining computers. In this way, blockchain operations are thus carried out without adding more to environmental degradation.
Paypal is not doing this proposal alone. They have partnered with DMG Blockchain Solutions Inc. to make this proposal a reality. Paypal's research arm Energy Web is responsible for developing the reward initiative and implement it. What they have done is very easy to understand and make it work.
Energy Web's idea of how the reward would work is based on the source of energy used by each miner. There is a public green key which they created and can only be claimed by miners using clean energy sources. These keys could be used to unlock additional rewards for the miner that has them.
In order to prioritize validation of transactions by green miners, there is lower transaction fees created for them than that of miners not using greener sources. In essence, greener miners would have more opportunity of validating transactions than others. Of course, they will also have exclusive access to additional BTC rewards for using a sustainable energy source for their work. In this way, more validators would see the economic gains of using cleaner energy sources and would definitely think about their choice of energy. Below is a summary of how the paper describes this solution:
The proposal rewards miners with bitcoins in a trust independent manner (i.e., without having to trust a third party to earn the reward) when they verifiably use a significant portion of low carbon energy sources in their
mining operations. Additionally, it aims to increase the likelihood of routing on-chain transactions to such miners. This not only acknowledges support for more environmentally responsible mining but also encourages other miners to shift towards cleaner energy sources. source
Potential deliverables of this proposal
The environmental impacts of Bitcoin mining has always been a downside to its global adoption. Critics of blockchain technology will always point to it as a strong point to drive home their argument against blockchain technology. This proposal by Paypal if effectively implemented would have a number of benefits such as those below:
- Positive positive outlook from Governments: In many countries, BTC mining has been banned because of its energy cost and subsequent environmental impact. At the very least, the authorities have pushed to regulate Bitcoin mining and cryptocurrencies as a whole in other to tighten their grip on miners. Some have outlawed cryptocurrencies as a whole. With a greener initiative like the one in this proposal, many critics especially governments would be turned into believers.
Bitcoin mining would generally have a better rating from the authorities if they understand that it has nothing to do with the main energy grid. Sustainable energy sources have zero impact on the environment. There are no emissions or use of fossil fuel that degrades the environment. When these important thoughts are well-understood by governments, they will likely change their legislation towards Bitcoin mining.
Mass adoption: Not just the governments alone, many people today are warry of getting involved in blockchain projects because BTC mining has been known to harm the environment. The number of people on chain is still relatively small compared to those that are yet to onboard. Also, the global community of sustainable energy proponents is really a very huge one. If these large crowds are to be reached to onboard, then using something they have passion for to attract them would be a great marketing strategy.
Welcomed upgrade: Since the launching of Bitcoin blockchain in 2008, the shortcomings have already been well established. Today, various groups have come up with upgrades to various aspects of blockchain technology and more developments are still on the way. If implemented, the initiative by Paypal will bring another dimension to making blockchains like Bitcoin work in a better way.
Creating an incentive to reward good actors is definitely great for every community. The blockchain ecosystem especially miners would be more inclined to maintain their integrity as they work on validating transactions and others aspects of the blockchain. Additionally, the lowering of transaction fees benefit blockchain users on the network. They get to pay less for the services of validating transactions. As a result, it is a win-win both for validators and users alike.
Finally
It remains to be seen when and how exactly the Bitcoin blockchain community reacts to this. But then, it looks like a great upgrade to what is already on the ground. Its all exciting for the BTC blockchain - for miners, users and everyone.
Feel free to learn more about this project:
Note: Thumbnail is mine.
Posted Using InLeo Alpha
Good thing that the adoption of solar panels is being implemented, that would give a more positive result for governments to allow the acceptance of Bitcoin or stop mentioning that excuse, maybe they will look for another excuse, it would be interesting for a project like this to enter Hive. Thank you very much for providing this quality post.
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