Consumers confidence in financial institutions for transactions waned. The creator of blockchain technology came up with a peer to peer transaction ecosystem that would be verified via cryptographic formulas, bypassing financial institutions as a whole.
The introduction of blockchain technology has heralded cryptocurrency networks such as Bitcoin, Ethereum and all the other cousins of cryptocurrency.
Blockchain technology operates on a whole ecosystem of computing power. Each transaction block is given a cryptographic signature which is broadcasted through the entire ecosystem and each computer verifies the cryptographic signature of the previous block and adds it to the latest block of transactions.
Ideally speaking, no one entity owns the blockchain, it is an ecosystem that belongs to the entire system of blockchain miners.
Blockchain technologies strength lies in the way it democratizes information which is shared throughout the whole ecosystem of miners. As of now, miners typically use Graphics Processing Units (GPUs) to handle blockchain transactions.
As long as you have an internet connection and a few GPUs laying around, you can easily hook up to the blockchain ecosystem. The strength of blockchain is strengthened if there are enough people in the system to keep transactions running such that no one entity has a monopoly on the transactions.
Power to the people!
From creating a whole new economy of cryptocurrencies, to logistical and pharmaceutical solutions. The applications of blockchain technology are myriad and promising.
Banes:
Nonetheless, are cryptocurrencies as rosy as it has been purported to be? The emergence of Bitcoin and all other internet cryptocurrencies have provided an almost anonymous means of transacting on the internet for ill vices or goods on the black market. The ill effects on society means that regulators are very wary with the expansion of cryptocurrencies.
Crypto mining relies heavily on clunky GPUs and other mods which come with a hefty carbon footprint.
Researchers from the Technical University of Munich conducted a study on the carbon footprint of the Bitcoin network. It revealed that the electricity consumption of the entire network amounted to roughly 46 TWh (Stoll, Klaaßen, Gallersdörfer, 2019).
Comparing the results with the carbon emissions of electricity generation, they calculated that the carbon footprint of the Bitcoin network amounted to 22–22.9 megatons per year.At this rate carbon emissions matched the electricity consumption of small states.
Considering that there are many cryptocurrency cousins of Bitcoin running on blockchain, the total carbon emissions of the entire industry is hefty.
Small retail or hobbyist members within the blockchain ecosystem are not able to capitalize on economies of scale that would cover rent and cooling expenses for their GPUS. Utilizing idle machines to access computing power only increases electricity consumption and carbon footprints.
Cryptocurrencies should be chucked in the store room for now and its true potential will perhaps only be realized with the commercialization of quantum computers or the invention of solid state GPUs?