The ambition of COP269 to secure global net-zero carbon emissions by 2050 is threatened by the alarming rise in the carbon footprint of the most popular blockchain networks. Today, the mining activities associated with cryptocurrencies like Bitcoin and Ethereum take a huge toll on the environment.
But not all blockchain networks are created equal and not all blockchain networks pollute the planet.
Why some blockchain networks raise environmental concerns
Every decentralized system needs a consensus mechanism. According to Investopedia, a consensus mechanism refers to any number of methodologies used to achieve agreement, trust, and security across a decentralized computer network. With blockchain networks, it is an algorithm that makes decentralized record-keeping similar to a centralized database. It’s an automated process to ensure that there exists only one single valid copy of the record shared by all the nodes.
There are different kinds of consensus mechanism algorithms, each of which works on different principles. Some of the most popular blockchain networks, like Bitcoin and Ethereum, currently use a consensus protocol called ‘proof of work’. With Bitcoin, for example, every 10 minutes on average, powerful computers (usually set up in sprawling data centers) around the globe compete (the “work”) to solve a computationally difficult math problem (called a hash). The first node to solve it (the “proof”) not only gets to write the latest batch of transactions to Bitcoin’s global record but also earns a monetary prize denominated in Bitcoin. This is good for Bitcoin miners but bad for the environment. The computational activity invested by miners competing for the monetary prize has a significant carbon footprint and is estimated to consume as much energy each year as some mid-sized countries. For example, a recent paper from the European Central Bank showed that the carbon footprint for Bitcoin and Ether and their combined yearly emissions negate past and target greenhouse gas (GHG) emission savings for most euro area countries.
Not all blockchains pollute, and more sustainable alternatives do exist. Some require significantly lower levels of energy consumption, which would have a negligible impact on global emissions and not result in a vast number of deaths.
The carbon footprint of Velocity Network™
Designed with sustainability in mind, Velocity Network™ uses a different consensus mechanism that doesn’t require carbon-intensive proof of work. The Network uses ‘proof of authority’ (PoA) as its consensus mechanism algorithm. More specifically, Byzantine Fault Tolerant (BFT) protocol – IBFT 2.0., which is more efficient than ‘proof of work’ by a factor of over a million. The PoA consensus model removes the “wasted mining” that is native to the proof-of-work consensus model. In an ideal situation, adding a record to the ledger takes the same energy as a Google search.
PoA consensus protocols have faster block times and a much greater transaction throughput than proof of work consensus protocols. In IBFT 2.0 networks, approved accounts, known as validators, validate transactions and blocks. Validators take turns creating the next block. Before inserting the block onto the chain, a super-majority (greater than or equal to ⅔) of validators must first sign the block. IBFT 2.0 has immediate finality. When using IBFT 2.0, there are no forks and all valid blocks are included in the main chain.
PoA consensus protocols work when node operators are identified and there is a level of trust between them, such as in the case of the permissioned Velocity Network™. In addition, Velocity Network™ also embeds a staking mechanism to incentivize participants to adhere to Network policies. Node Operators are required to stake credits (tokens) as part of their participation. These tokens will be seized by the protocol as penalties in case of bad behavior by the Node Operator.
In general, the consensus algorithm used on Velocity Network™ enables distributed consensus in an innovative, efficient way while still being fair and secure. It allows Velocity Network™ constituents to achieve fast, low-latency transactions with guaranteed finality in seconds or less, while minimizing the Network’s impact on the environment.
Photo by Andreas Gücklhorn on Unsplash