Crypto mining needs to be redefined before simply casting it away



Blockchain mining networks are often victims of their success. The two contemporary realities that demarcate the mining landscape and cause blockchains to fall short of what they promise are 1) the ongoing technological arms race driven by inherent competitive greed; and 2) the rising energy costs associated with proof-of-work (PoW) mining. Blockchains built on the PoW consensus have become highly unequal and increasingly centralized in terms of their hash rate. This concentration of mining power in fewer and fewer hands is an attack on the fundamental requirement for distribution and decentralization that blockchains possess. In addition, the motivation to ramp up mining power has a knock-on effect in terms of runaway energy costs, which have the potential to cause irrevocable environmental harm, as has been the crux of the Chinese Bitcoin (BTC) mining saga. To ensure a sustainable future for blockchain and cryptocurrencies, the hash rate must be distributed more equitably, ensuring that the chief components of distribution and decentralization are kept intact. This requires a reimagining of the mining process as we know it and necessitates a restructuring of PoW systems. Related: Green Bitcoin: The impact and importance of energy use for PoW The detrimental impact of mining re-centralization Before unpacking what such a solution may look like, it is worth emphasizing the extent of the issues. The PoW consensus was, and continues to be, essential to Bitcoin’s enduring popularity, success and reliability. Most notably, PoW offers a solution to the well-known Byzantine Generals’ Problem in the fields of mathematics and computer science, through an incentivization setup and ongoing resource commitment that makes it infeasible for a malicious party to interfere with honest consensus. Distribution and decentralization remain the crucial aspects of solving the dilemma where parties must agree on a single strategy to avoid complete failure, by enabling widespread consensus on “the message” and eliminating the risk posed if some of the involved parties are corrupt or unreliable. Yet, the more centralized and dominated by a small number of entities a blockchain network becomes, the less the consensus protocol can function as a solution to this problem.

source

You May Also Like