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Sustainable Blockchain and Bitcoin Cryptocurrency

Updated September 21, 2021
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Sustainable Blockchain and Bitcoin Cryptocurrency essay

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Blockchain finance is the application of blockchain technology in the financial area.

The financial services industry is the driving force for global economic development and one of the most centralized industries at the same time. The information asymmetry between the two parties in the financial market has made it impossible to establish an effective credit mechanism. There are a large number of centralized credit intermediaries and information intermediaries in the industrial chain, which slows down the system operation efficiency and increases the cost of capital transactions. The open and non-tamperable nature of blockchain technology can help build a decentralized trust mechanism with the potential to change the financial infrastructure. Various financial assets can be moved onto the blockchain and becomes a digital asset on the chain, which is stored, transferred and traded on the blockchain. It has a broad application prospect in the financial field.

The security and accuracy of information is achieved by collectively maintaining a sustainable growth database by sharing at distributed nodes, which is also called mining. Mining consumes a lot of energy while creating great amount of heat.For example, the method of proof of work(PoW) is a big problem in terms of energy consumption. According to a report by the cryptocurrency website Digiconomics, global bitumen mining consumes more electricity than a country in Serbia. According to calculations, by July 2019, Bitcoin’s peer-to-peer network (P2P), such as BitTorrent, will use more electricity than the United States; by November 2020, the required power consumption will exceed the current global electricity consumption. The wasted energy can be used in various ways, like fishery, agriculture, heating, to get sustainable development.

Application field

Applying this technology can solve the trust and security problems in financial transactions. Blockchain technology has become an optional direction for the future upgrade of the financial industry. Through the blockchain, both parties can conduct economics without the need for third-party credit intermediaries. This reduces the cost of assets like equity, bonds, notes, warehouse receipts, and fund shares being transferred globally.

Blockchain Technology

Definition

  1. A blockchain is a distributed database (system) placed in a non-secure environment.
  2. The blockchain uses cryptographic methods to ensure that existing data cannot be tampered with.
  3. The blockchain uses a consensus algorithm to reach consensus on new data.

A system with the above three properties is a blockchain.

P2P network

In a P2P network, each participating node is both a server and a client, and is both a provider of information and a consumer of information. The purpose of P2P information retrieval is that any node in the network can submit a request for retrieval, and then the nodes that retrieve the relevant information will respond to the request, and the local routing mechanism is routed to the related content in a peer-to-peer form. Transfer to the requesting node.

The profession is collectively called Peer-to-peer networking or Peer-to-peer computing, which can be defined as: Network participants share a portion of their hardware resources (processing power) , storage capabilities, network connectivity, printers, etc., these shared resources provide services and content over the network, and can be directly accessed by other peers (Peer) without going through intermediate entities. The participants in this network are both the provider of resources, services and content, and the acquirer of resources, services and content (Client).

BitTorrent

A typical download server provides download services for every user who makes a download request, and BitTorrent works differently. The distributor or file holder sends the file to one of the users, and the user forwards it to other users, and the users forward each other’s files to each other until the download of each user is completed. This method allows the download server to process download requests for multiple large files at the same time without taking up a lot of bandwidth.

The development of bittorrent relies on peer-to-peer technology. Peer-to-peer (P2P) research has always been the focus of foreign universities and well-known companies and R&D institutions. It is even referred to by Fortune magazine as one of the four new technologies that change the development of the Internet and is considered to be the key technology for the future of wireless broadband Internet. It is now widely used in new technologies and software projects.

Hash

The SHA family of five algorithms, SHA-1, SHA-224, SHA-256, SHA-384, and SHA-512, are designed by the National Security Agency (NSA) and are based by the National Institute of Standards and Technology. (NIST) release; is the US government standard. The latter four are sometimes called SHA-2.

SHA-1, SHA-224, and SHA-256 are suitable for messages that are no longer than 2^64 bits. SHA-384 and SHA-512 are suitable for messages that do not exceed 2^128 bits in length.

How does the Blockchain Work?

Bitcoin address

Unlike banks, Bitcoin does not belong to any account, but only to a bitcoin address. Bitcoin transactions are also transferred from one address to another. In the case of Bitcoin transactions, the Bitcoin giver and the receiver randomly generate a 256-bit private key (private key) and convert it into an ASCII private key through the Base58Checking encryption algorithm. The 256-bit private key is converted to a 521-bit public key by the Elliptic Curve DSA algorithm. After the public key is converted to 160 bits by the SHA-256 algorithm, the address in ASCII format is generated by the Base58Checking encryption algorithm. And this address is the bitcoin address.

Proof-Of-Work

The important role of bitcoin mining is to obtain new blocks and put the blocks into the blockchain to make the transaction effective. The mine union receives remuneration from both the system and the transaction while maintaining the normal operation of the Bitcoin blockchain system. Bitcoin mining systems, because of their security requirements, are specifically designed to require considerable computational power to solve (but easily verify) the SHA-256.1 hash (hash) algorithm. Answering this hash arithmetic has no practical meaning other than obtaining a new block in the Bitcoin system. We call it ‘proof-of-work.’

Bitcoin

The concept of Bitcoin was originally proposed by Nakamoto in 2009. According to the idea of Nakamoto, the open source software was released and the P2P network was constructed. Bitcoin is a digital currency in the form of P2P. Peer-to-peer transmission means a decentralized payment system.

Unlike most currencies, Bitcoin does not rely on a specific currency institution for distribution. It is generated by a large number of calculations based on a specific algorithm. The Bitcoin economy uses a distributed database of nodes in the entire P2P network to confirm and record all transaction behaviors. And use cryptographic design to ensure the security of all aspects of currency circulation. The decentralization of P2P and the algorithm itself ensure that the currency cannot be manipulated by mass-produced bitcoins. Cryptographic based design allows Bitcoin to be transferred or paid only by the actual owner. This also ensures the anonymity of currency ownership and circulation transactions. The biggest difference between Bitcoin and other virtual currencies is that their total quantity is very limited and extremely scarce. The currency system has only been no more than 10.5 million in four years, and the total number will be permanently limited to 21 million.

Blockchain Deficiency

Bitcoin has contributed a lot to the development of the blockchain industry, which has raised public awareness of the blockchain, but it has also brought about some negative effects.

The method of proof of work is a big problem in terms of energy consumption, it produces a lot of greenhouse gas emissions and creates nothing for the real economy.

According to a report by the cryptocurrency website Digiconomics, global bitumen mining consumes more electricity than a country in Serbia. According to calculations, by July 2019, Bitcoin’s peer-to-peer network (P2P), such as BitTorrent, will use more electricity than the United States; by November 2020, the required power consumption will exceed the current global electricity consumption.

Related data

Below is a summary of some of the high energy and high emissions related data of the POW consensus mechanism:

  • The most efficient ‘mining machine’ uses about 1600 KWh for each bitcoin dug out.
  • According to mainstream computing power, the global mine consumes more than 600,000 kWh per hour and consumes about 5.2 billion kWh per year.
  • Bitcoin last year’s electricity consumption was 36 TWh, equivalent to the annual electricity consumption in Qatar.
  • Morgan Stanley predicts that bitcoin power consumption will triple in 2018, equivalent to one year of electricity consumption in Argentina.
  • If the original focus on the use of thermal power in Ordos, according to carbon dioxide emissions (kg) = power consumption x 0.785, each excavation of 1 bitcoin, will emit 6.75 tons of carbon dioxide.
  • Bitcoin mining in 2017 is equivalent to an increase of 35.992 million tons of carbon dioxide emissions.

Therefore, the current “energy blockchain” model will inevitably shift towards green energy conservation, and develop a more environmentally friendly and compatible consensus mechanism to better serve the real economy and achieve sustainable development in the blockchain industry.

Future

Since energy consumption is a big problem with the method of proof of work , researchers of cryptocurrencies are considering other methods of research and development. One is resource-saving mining, which can reduce the workload, but it needs to be done with trusted hardware. The other is the proof of share(PoS). Both of the methods above are hard to realize at this moment.

So we must find a realistic way to make use of the wasted energy and gain sustainable development. Since solving the hash algorithm is useless work but creates a lot of heat ,we can take a different approach and use the heat to do something useful. There are various ways to use the heat for sustainable development.

Sustainable Development On Blockchain

Fish farming

There is a greenhouse in Canada and a fish farm is using the heat generated by bitcoin mining to achieve its operation, which proves that bitcoin mining will become a sustainable development model in the future.

This bitcoin mine is connected to greenhouses and fish farms and leads the way in developing sustainable energy. The owner, Bruce Hardy, wants to create a sustainable food system. The heat generated by the mining machine can keep the plants in the greenhouse and the fish in the fish pond warm, while the wastewater produced by the fish pond is ideal for plant and crop growth due to the rich nitrate.

Hardy has been involved in software development and bitcoin mining, so he is no stranger to the heat generated by hardware servers and bitcoin mining machines. In an interview, he said:

Bitcoin mining machines are an excellent alternative to servers that produce the same amount of heat that we can use for agricultural development.

Some miners use mine heat for indoor heating, while Hardy prefers to focus on sustainable applications. He chose an abandoned car museum for a series of operations.

Hardy pointed out that he also hired some staff with bitcoin earnings.

Bitcoin mining revenues make me affordable, and I can showcase our agricultural innovations.

Due to the local cold environment and abundant hydropower resources, low-cost energy has made this a resort for cryptocurrency mining.

Cold regions in northern China are also popular for Bitcoin mining due to low electricity bills, and competition from Canada can help protect the decentralized nature of Bitcoin. Innovations in sustainability can help Bitcoin miners increase revenue while also alleviating concerns about accelerated resource consumption due to mining.

Agricultural

The French company Qarnot has launched a mining heater that allows for “mining” while heating. Now the Czech blockchain startup has opened its mind and used the heat generated by the mining server to grow tomatoes.

It is reported that the blockchain startup was founded by Kamil Brejcha, co-founder of the Czech cryptocurrency exchange NakamotoX. On March 10th, Kamil Brejcha said on Twitter that they used the heat generated by the bitcoin mining server to make a greenhouse for planting plants.

The project was adopted by a new project called “Agricultural Technology”. The first plants grown in a 5-acre greenhouse were tomatoes and are called “encrypted tomatoes”. At present, the first batch of tomatoes planted with excess heat from mining is about to harvest.

Recycling the heat generated by digital currency mining may be one of the solutions to the energy debate it has triggered. Bruce Hardy, a software company based in Winnipeg, Canada, connects greenhouses, fish farms and mines, using the heat generated by mining to keep fish ponds warm, while fish-derived excreta is used for planting. vegetables.

Heating

The citizens of Irkutsk, Russia, in the Siberian region, have been using Bitcoin mining machines for heating. The city of Irkutsk has attracted a large number of bitcoin miners due to low electricity bills.

Local entrepreneurs Ilya Frolov and Dmitry Tolmachyov invented the prototype of an underground heating system using the heat generated by the Bitcoin mining machine. Frolov discusses the system prototype with local media:

Usually the mining machine is cooled by an exhaust fan; then the hot air is discharged into the air. We believe that this method is neither reasonable nor environmentally friendly, so we have come up with the concept of using the heat generated by the calculations for home heating.

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Sustainable Blockchain and Bitcoin Cryptocurrency. (2021, Sep 21). Retrieved from https://samploon.com/sustainable-blockchain-and-bitcoin-cryptocurrency/

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