Need to redefine crypto mining before simply discarding it

Blockchain mining networks are often the victims of their success. Two contemporary realities that delineate the mining landscape and cause the blockchain to fail to meet its promises are: 1) a continuous technological arms race driven by internal competition and greed; 2) rising energy costs associated with proof-of-work (PoW) mining . The blockchain based on the PoW consensus has become highly unequal and increasingly centralized in terms of hash rate. This concentration of mining rights in the hands of fewer and fewer people is an attack on the basic requirements of distributed and decentralized blockchain.

In addition, the motivation to increase mining capacity has a knock-on effect in terms of uncontrolled energy costs, which may cause irreversible environmental damage, as Chinese people’s crux Bitcoin (Bitcoin) Mining legend. To ensure a sustainable future for blockchains and cryptocurrencies, hash rates must be distributed more fairly, ensuring that the main components of distribution and decentralization remain the same. As we know, this requires a reimagining of the mining process and a reconstruction of the PoW system.

Related: Green Bitcoin: The impact and importance of energy usage on PoW

The adverse effects of mining recentralization

Before unraveling the appearance of such a solution, it is worth emphasizing the severity of the problem. The PoW consensus is critical to the continued popularity, success and reliability of Bitcoin.Most notably, PoW is well known The Byzantine General’s Question In the fields of mathematics and computer science, through incentive settings and continuous resource commitments, malicious parties cannot interfere with honest consensus.

Distribution and decentralization are still key aspects to resolve the dilemma. In this dilemma, all parties must agree on a single strategy to avoid complete failure, by reaching a broad consensus on “information” and eliminating the need for corruption or The risk of unreliability. However, the more centralized and dominated by a few entities in the blockchain network, the less the consensus protocol can solve this problem. The rise of large-scale ASIC farms enables a small number of powerful participants to control the blockchain infrastructure, threatening its ability to remain distributed and decentralized-ultimately trustless.

This “late” problem of the PoW consensus is to motivate miners by competing for block rewards. Although this is an important part of the game theory structure to maintain network security, this all-or-nothing competition also creates serious problems. In particular, it gave rise to the allegorical “athlete cheating problem”, which describes when the rewards of a game are very worthwhile, participants will win at all costs, including cheating. Imagine a group of athletes on the starting line of the first match in a series of competitions, where each of them will try to cross the finish line first and win a prize.

It takes a certain amount of luck to win every game (not just the fastest person wins), but the chance of winning increases with the athlete’s speed. In this case, cheating is defined as the use of technology and/or collusion to obtain a substantial advantage over other contestants, so that the winner of each game is not random enough to provide a solution to the Byzantine Generals problem (that is, through sufficient Randomly distributed resource commitments to achieve distributed consensus).

Similarly, the PoW competition has led to the development of more energy-consuming machines and larger mining farms, reducing the decentralization and distribution of the network, and preventing resource commitments from serving as a means of trustless verification. In addition, it will promote the overall energy use of the network, and if it is not controlled, it may have a negative impact on the environment.

Related: Measuring success: offsetting the encryption carbon emissions required for adoption?

Balancing the agreement of the blockchain mining network

To develop a solution to the problem of athletes cheating, it is necessary to first realize that it is not the total hash rate of the blockchain network that provides security; on the contrary, it is the way the hash rate is distributed. To this end, people seek a solution in which the redistribution of hash rate is a basic feature of the protocol (rather than leaving it to political or centralized committees-no matter how good the intentions).

The chances of winning the “race” can be balanced by setting obstacles to runners who are significantly faster and giving an advantage to runners who are significantly slower. In the blockchain network, this can be achieved through a point-to-point, thermodynamic-like equilibrium process, which can smoothly and verifiably adjust the personal hashing difficulty of miners. This allows the network to move towards the balance of effective hash rate and avoid the most serious over-centralization of mining rights on the network, while continuing to operate autonomously without the involvement of a trusted third party.

There are currently a large number of implementations of blockchain technology, most of which have some form of economic or monetary value, and use underlying technologies designed to best ensure network security and efficiency. However, an algorithmic balancing protocol, which pushes the network closer to homogeneous distribution (although not completely-a completely “flat” network will bring its own economic and security issues), which can achieve a balance between distribution and economic incentives The best balance. This can significantly reduce monopoly mining activities by inhibiting the construction of expensive technology and large-scale ASIC mining farms to continuously improve processing capacity, while keeping the network’s carbon footprint to a minimum.

A greener, fairer and safer future

The problems caused by the widespread recentralization of mining that we generally see today pose a major challenge to the PoW consensus, but they should not mean its end. As a revolutionary technological innovation, PoW solves a long-standing problem in mathematics and computer science, paving the way for the success of Bitcoin and many other cryptocurrencies, and at the same time promises a new way of economic exchange. If we put it aside too hastily, we may not be able to fully explore the transformative power of PoW.

Related: Staking will treat proof of work as breakfast-that’s why

This is similar to mankind’s exploration of the economic system. Capitalism is one of the greatest and most progressive systems in human history—improving innovation, longevity, opportunity, and quality of life for billions of people. However, if left unchecked, it may lead to unprecedented wealth, inequality, and may even bring us to the brink of climate disaster. What society usually tries to do is not to completely abandon it, but to balance the pros and cons of this system-to create a modest form of capitalism in which greed and monopoly efforts are not allowed to be completely dominated, so a more responsible , More effective capitalism, fairer society can emerge and prosper. To a large extent, this is what society tries to implement in the form of wealth redistribution (for example, through taxation, antitrust laws, etc.) (with varying degrees of success).

Similarly, the PoW consensus is a revolutionary invention, but it needs to be adjusted to curb the worst excessive greed in the system. In general, we have the opportunity—and also the responsibility—to make the PoW consensus protocol more in line with the needs of society and its original purpose by reducing the tendency of monopoly and preventing the re-centralization of encrypted mining. In short, instead of reinventing the wheel (abandoning PoW in favor of risky alternatives), what we need is a way to use wheels more efficiently to build machines that connect and change the world.

This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should conduct research when making a decision.

The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Alexander Hobbs Is Zenota’s scientific director. Alexander is a doctor. Graduated from theoretical astrophysics, he has written a large number of scientific publications in the fields of supermassive black holes, galaxy formation and dark matter, and has given lectures at many international conferences and seminars. Before joining Zenotta, he held post-doctoral positions at the Institute of Astronomy at the Swiss Federal Institute of Technology Zurich and the Institute of Computational Science at the University of Zurich.