Big step towards energy efficient blockchains

Blockchains consume a huge amount of electricity. This month, one of the largest, Ethereum, is switching to a much more energy efficient system. It’s a huge step forward, but first we’ll have to wait and see if everything goes well.

The world of crypto and blockchains is holding its breath because something big is about to happen. On or around September 15th, Ethereum, the second largest crypto network, will change the way new blocks are released on the chain. If the adjustment is successful, the energy consumption will be drastically reduced.

Ethereum is the blockchain to which the cryptocurrency ether is attached, and like most NFTs (non-fungible digital title certificates).

Blockchain, what was that again?
The principle of blockchain is based on the digital currency bitcoin. The added value of a blockchain lies mainly in the special structure that makes fraud and hacking difficult. The blockchain consists of a large network of hundreds to thousands of interconnected computers in which transactions are recorded. This creates a decentralized cash book.
How does it work? When someone wants to make a transaction, the data for the intended transaction is put into a new block. All computers on the network then view the requested transaction and verify that it is legitimate. If all nodes have approved the transaction, it will sit at the end of the blockchain and be immortalized that way. The chain of blocks gets longer and longer and actually represents the history of all transactions ever made.
The decentralized nature of blockchain makes fraud almost impossible. If someone tries to cheat on one computer, the nodes will not reach an agreement and the transaction will not go through. The networked structure of a blockchain thus enables two parties who do not know each other to carry out a transaction in a reliable manner, without the intervention of a third party.

Heavy computers

Currently, Ethereum, like its big brother Bitcoin, still uses the principle proof of work to create new blocks in the chain. Heavy computers calculate complicated sums day and night to have a chance (the more computing power, the greater the chance) for the reward: the release of a new block and a reward in crypto-coins.

This method consumes energy and produces CO2emissions on. Just keeping the Ethereum network up and running emits just as much CO2 looks like Denmark, calculated CNET.

raise the barrier

However, the heavy computer calculations are necessary to set up a barrier against people with evil in mind. Because the Ethereum network now runs on hundreds of thousands of computers around the world, bad guys can never get their hands on it.

We only need to get rid of the power-guzzling computers the Ethereum community has known for years. The idea now is that the calculation of all these computers is replaced by people who take a stake in the chain: proof of effort (effort meaning ‘share’ or ‘interest’).

Lottery

Whoever wants this deposits a fixed amount on the blockchain and then participates in a lottery. Once someone’s number is drawn, they are given the right to release a block on the Ethereum blockchain.

And just like with the old system, such a participant invests a small amount in the network, so it is not in his/her interest to mutiny or cheat the network afterwards. More details on this line of thinking in this podcast from BNR. If you do something that is not allowed, you risk being kicked out of the network and therefore losing your share.

This new system also makes it virtually impossible for malicious parties to take over. And no more rows of clattering computers. The Ethereum Foundation itself estimates that electricity consumption will drop by more than 99 percent.

Concerns raised

Whether this transition is successful remains to be seen. Some experts have already raised concerns about whether the new approach (proof of effort) will be as secure as proof-of-work, which has been proven for years. First of all, the new software could contain bugs at first, small bugs that get in the way of proper functioning.

There is also some uncertainty about how users will behave,” says Davide Grossi, adjunct professor. multi-agent decision making at the University of Groningen.

“This switch from Ethereum is ultimately a so-called hard fork (a split from the existing chain, ed.). In theory, competition can therefore arise between a part of society that changes and a part that uses the old proof of work-the way goes on.’

Stress test

Still, Ethereum doesn’t change out of the blue. In the background, for a year and a half, a separate blockchain has been running in parallel with the main chain, which has been exposed to all kinds of stress tests. Ethereum’s executives seem to have enough confidence that the main chain is also ready for the big shift. We will know more in about ten days.

Opening image: Ethereum logo PHOTO: Depositphotos

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