What is Blockchain?
Now known for offering the engine for a variety of “hidden” digital currency systems such as Bitcoin, blockchain (or Distributed Ledger Technology) describes a computer-controlled process designed to make databases more egalitarian, transparent and virtually tamper-proof.
Although this is an ideal result, arguments remain as to whether the technology actually achieves its goals.
Moreover, the very way it achieves this makes it a dubious technology in a warming world that is concerned with keeping a lid on the amount of energy consumed.
Why is it called a blockchain?
The “block” in a blockchain is a ledger of publicly available data. This can be just about anything, from the details of a money transaction to medical records to proof of ownership. It can be shared by a small group of friends, or be open to anyone in the world to build on.
The development of blockchain in the 1990s came as a way to ensure that changes in documents were timed. It was not until 2009 that an engineer with the pseudonym Satoshi Nakamoto developed a database based on blockchain technology for a cryptocurrency called Bitcoin.
What distinguishes the concept from most other databases and open documents is a unique identifier called a hash based on the content of the document, and provides a randomly generated code called nonce.
Changing a block means creating a new hash, which is equivalent to a brand new block. This new block refers to the hash of the previous block they were based on, which is what makes a series of blocks a blockchain.
Since each new block registers the previous hash, the technology is in principle tamper-proof. If someone were to edit a block earlier in the chain, perhaps to rewrite the ownership history or change a value, the hashish would also change. As a consequence, blocks extending down that chain will no longer be connected to it, rendering that chain invalid.
How does blockchain technology work and why is it so controversial?
In fact, there are two methods to ensure that each node in a blockchain is legitimate.
In permitted blockchains, a consensus is required on the response to these calculations based on the content of each block. If most copies of a chain all agree on the calculation of the next block, it will be accepted.
Unauthorized blockchains require a tortuous process each time a new block is created. Described as a selection mechanism, the calculations 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 the advantage of solving these puzzles.
Why might some blockchain processes be bad news for the climate?
Regardless of the type of blockchain technology you use, it takes energy to force a computer to compute proof of work for each new block.
Usually this is not a big deal. But when it comes to popular forms of cryptocurrency, it comes with a reward to add new blocks – or “mining”. Thanks to the economic rules built into the unlicensed blockchain, each recovered block gives the miner a small amount of coins.
This makes cryptocurrency mining a lucrative pastime, and encourages individuals to use large amounts of computing power for the hefty calculations needed to solve the blockchain puzzle and build longer and longer chains.
Just a few years ago, in 2018, the Bitcoin network monitored around 26 quintillion (10 to 18) hashing operations every second. While it is clear that each individual requires electricity to run calculations and maintain the computers, it depends on getting an exact number on what kind of devices are used to recover.
An estimate estimates that the amount of electricity consumed by Bitcoin alone in 2018 is around 2.55 gigawatts, which means that Bitcoin’s energy consumption is at about the same level as a small nation.
Another estimate by the Cambridge Center for Alternative Finance suggests that Bitcoin currently uses more than half a percent of the world’s electricity production.
Of course, the source of electricity does not have to be fossil fuels. In a future with clean energy sources, questions about energy consumption may be less urgent. Changes in the way blockchain locks preserve their integrity, perhaps by weaving in quantum encryption, may even see “greener” forms of cryptoeconomy.
None of this, however, takes into account the huge amounts of e-waste generated by the industry, which for Bitcoin alone can exceed 30 metric kilotons per year; can be compared to the small IT equipment waste produced by a country like the Netherlands.
Currently, almost every new block in the chain comes with a side dish of carbon and tons of buried resources, which makes the increase in popularity of blockchain currencies a major environmental problem in the coming years.
All explanations are determined by fact checkers to be correct and relevant at the time of publication. Text and images can be changed, removed or added as an editorial decision to keep the information up to date.
