(Written by @ElliotHill of the Cardano Foundation)
Throughout 2020, the worldwide community has faced one of its most adverse years in the past decade, with the Covid-19 pandemic forcing businesses and individuals alike to temporarily change their normal daily lives.
As we focus on combating the virus, it is easy to forget that one of the biggest challenges we collectively face is still looming as closely as ever — climate change, environmental destruction, and the loss of natural habitats.
Technology companies, and especially those in the already highly-distributed blockchain space, have been well poised to deal with the new working environments imposed by Covid-19 restrictions — but can we be equally as innovative in our approach to the worldwide environmental crisis?
Behind every webpage, application, search engine, or cryptographic transaction, there is a huge amount of physical computing infrastructure and data storage, all of which requires power to run and maintain. This hidden environmental cost of technology has been made many times greater by early blockchain protocols, which use computing power to reach consensus.
Here, we are going to discover how proof of stake (PoS) blockchains are transforming the industry’s green credentials, look at how improving consensus mechanisms can reduce blockchain’s environmental impact, and explore new ways to empower environmental custodianship and sustainable development through distributed ledger technology.
What do we mean by world computers?
The world computer concept was first used to describe the Ethereum blockchain, but it can be more broadly applied across the entirety of stand-alone blockchain protocols. Essentially, a world computer is a distributed ledger that is maintained by multiple decentralized nodes and participants across the entire globe.
In this way, no single participant controls the network, and the protocol can be put to use for multiple participants equitably and sustainably — in theory. You can read more about the evolution of blockchain technology in our earlier article here.
At the Cardano Foundation, we position the Cardano blockchain as a distributed social and financial operating system, which is a similar concept to a world computer. Post-Shelley, we are already well on the way to the full decentralization of the Cardano blockchain.
As a result, it is a good time to reflect on the wider benefits, both environmentally and socioeconomically, that guided the development of Cardano.
Blockchain for sustainable development
Reducing the impact of consensus is crucial for sustainability and scalability, but it is just one way we can reduce our environmental impact at the protocol level. As an industry, we now need to think about how we promote positive environmental and societal change in a wider setting.
Environmental custodianship and the social empowerment of underserved communities have always been core areas of focus for the Cardano Foundation, and indeed every Cardano ecosystem participant.
For example, our ecosystem partners, IOHK, have recently announced their participation in a hackathon challenge alongside the United Nations, to explore how Marlowe financial contracts can advance U.N. sustainable development goals. The Cardano Foundation also advances these goals through our work with multiple nations in Africa, and through the exploration of industry partnerships.
We expect that as tokenization, decentralized applications, and smart contracts become available through Goguen, we will welcome and encourage multiple projects that leverage Cardano’s blockchain technology for environmental protection — such as provenance and origin tracking of raw materials, carbon credit issuance, and more.
Energy usage in proof of work (PoW) consensus
The major criticism of PoW consensus mechanisms, especially by people outside of the blockchain industry, is its lack of environmental sustainability in terms of energy usage. This is due to the large amount of hashing power or computing power expended to solve the cryptographic problems required to validate new blocks.
Naturally, as the most popular and longest-serving blockchain, much of this criticism has been leveled at Bitcoin. A short Google search reveals a multitude of news articles comparing Bitcoin’s energy usage to that of entire nations, and these estimates appear to increase year-on-year.
For example, in May 2018 blockchain researcher and economist Alex de Vries revealed that the Bitcoin network consumed as much energy as Ireland per year, the 66th greatest nation worldwide for energy consumption. In April 2019, just one year later, de Vries revised this estimate, comparing the Bitcoin network’s increased energy demands with that of Switzerland — the 44th greatest nation in the world by energy usage.
Consider also that the Bitcoin network is just one protocol in the 75% of blockchains that use PoW mining power to reach consensus, and it is easy to surmise that PoW is an unsustainable approach to consensus if we wish to scale blockchain globally without wreaking havoc on the environment.
This is certainly a complex topic. Some experts could argue that PoW still utilizes far less energy than mining metal and logging trees for the process of minting or printing physical fiat money worldwide, and in this way, even PoW-based cryptocurrencies could become more sustainable mediums of exchange to fiat if they were adopted globally.
However, the functionality of distributed ledgers now extends far beyond simple value layers, and blockchains have the potential to become truly borderless social and financial operating systems.
If this potential is to be unlocked, we must explore the proven methods of reaching consensus that do not require the expenditure of large amounts of hashing power. As is the case with Cardano, this means adopting PoS consensus mechanisms. Let’s explore why the PoS consensus is environmentally superior to PoW.
Energy usage in PoS consensus
We deep-dived into the differences between PoW and PoS consensus in our previous article, ‘Consensus on Cardano vs. other blockchains’, but let’s take a closer look at why PoS is superior in terms of energy conservation.
By design, PoS blockchains require significantly lower hashing power and therefore lower energy requirements than PoS blockchains. When the Ouroboros protocol was first introduced by researchers at IOHK in 2017, one of the key focuses was designing a consensus protocol that would offer similar security guarantees to PoW, but demand significantly less energy.
Rather than miners investing computational resources in order to participate in the leader election process, as in the Bitcoin and other PoW blockchains, stake pool operators on Cardano instead rely on the Ouroboros protocol to randomly select a slot leader to validate new blocks. These slot leaders are chosen from active stake pools on the Cardano blockchain, proportional to the stake that each pool possesses according to the current blockchain ledger. In this way, Cardano scales horizontally via the addition of new stake pools, rather than vertically like PoW blockchains which require more hashing power.
This negates the need for energy-hungry mining as in PoW protocols, which is one of the key barriers to scalability and adoption of blockchain technology. The Ouroboros protocol is so energy-efficient, that it is possible to run a Cardano node on a simple Raspberry Pi micro-computer, which has a power consumption of just 15–18 watts.
Therefore, consensus on the Cardano blockchain through Ouroboros has been estimated to be over four-million times more energy-efficient than the Bitcoin protocol — a figure that makes Cardano truly worthy of becoming a global social and financial operating system.
You can read more about the Ouroboros protocol and Cardano’s commitment to environmental protection on Cardano.org. If you would like to get involved in building solutions on Cardano, sign up to our Developer Portal waiting list here.
Want to read more from Cardano in the meantime? Check out some of our recent articles below:
- A first look at the Cardano Developer Portal
- Consensus on Cardano vs. other blockchains
- One identity to rule them all — managing digital identities using blockchain
- An introduction to tokenization
- Cardano Foundation announces its delegation methodology