It describes a computerized process designed to make databases more fair, transparent, and virtually tamper-proof, now known for providing the engine for various “secret” digital currency systems such as Bitcoin, blockchain (or distributed ledger technology). While this is an ideal outcome, debate continues as to whether the technology is truly achieving its goals. At most, the way this is achieved makes the technology questionable in a warming world that seeks to reduce the amount of energy consumed.

Why is it called blockchain?

A “block” in a blockchain is a ledger of public data. This can be anything from the details of a financial transaction to medical records and proof of ownership. It can be shared by a small group of friends or be open to anyone in the world to create. The development of the blockchain in the 1990s emerged as a way to ensure that changes in documents are recorded reliably over time. Only in 2009, an engineer under the pseudonym Satoshi Nakamoto developed a database based on blockchain technology for a cryptocurrency called Bitcoin.

What distinguishes this concept from many other databases and open documents is a unique identifier called a hash, which provides a randomly generated code, called a nonce, based on the content of the document. Modifying a block means creating a new hash that is equal to a completely new block. This new block turns the block series into a blockchain by referencing the hash value of the previous block on which it is based.

The technology is in principle tamper-proof, as each new block records the previous hash. If someone edits a block at an earlier period of the chain, perhaps to rewrite the ownership history or change the value, the hash will also change. As a result, blocks extending down that chain will no longer connect to it, invalidating that chain.

How does blockchain technology work and why is it so controversial?

Essentially, there are two methods to ensure the legitimacy of each node in the blockchain. Permissioned blockchains require consensus to answer these calculations based on the contents of each block. If most copies of the chain agree with the calculation of the next block, it is accepted. Permissionless blockchains require a roundabout process each time a new block is created. The calculations, defined as the voting mechanism, are based on a built-in puzzle that takes some time to solve. In theory, this should slow down the creation of new blocks, but in practice, those with more computing power have an advantage in solving these puzzles.

Why some blockchain processes could be bad news for the climate

No matter what blockchain technology you use, it takes energy to have a computer to calculate the proof-of-work for each new block. Usually this can be a minor issue. But as with popular cryptocurrencies, adding new blocks – or “mining” – comes with a reward. Thanks to the economic rules built into the permissionless blockchain, each mined block earns the miner a small amount of money.

This makes cryptocurrency mining a lucrative pastime, encouraging people to spend massive amounts of computing power on the heavy computations needed to solve the blockchain puzzle and build longer chains. Just a few years ago, in 2018, the Bitcoin network processed approximately 26 quintillion (power of 10 to 18) hashes every second. While it is clear that each of these requires electricity to perform calculations and protect computers, getting an exact number depends on the types of devices used for mining.

By one estimate, the amount of electricity consumed by Bitcoin alone in 2018 was around 2.55 gigawatts, which means that Bitcoin’s energy consumption is roughly the same as that of a small nation. Another estimate by the Cambridge Center for Alternative Finance suggests that Bitcoin currently consumes more than half of the world’s electricity production.

Of course, the source of electricity is not necessarily fossil fuel. In the future of clean energy sources, the issue of energy consumption may be less relevant. Changes in the way blockchains maintain their integrity could even lead to “greener” forms of the crypto economy, perhaps woven into quantum cryptography.

None of this takes into account the large amounts of e-waste generated by the industry, which can exceed 30 metric kilotons per year for bitcoins alone; It is comparable to the small amount of IT equipment waste produced by a country like the Netherlands. Currently, almost every new block on the chain comes with a carbon garnish and tons of hidden resources, making the rise in popularity of blockchain currencies a major environmental issue in the years to come. Source