What does Cryptocurrency consensus have to do with Sustainability? de-Code Proof of Work v/s Proof Of Stake and Casper

What does Cryptocurrency consensus have to do with Sustainability or Carbon footprint?

I am a strong believer in sustainability, be it in real life or the enterprise ,shifted to a coffee flask and a swell water bottle though I find a lot of paper and plastic cups at home and the office, same is the case with 2 trash bins to separate for responsible recycling.

I'm keeping the theme as green and sustainability for this post as the topic revolves round this central theme.

As we write this there was a very serious news about China shutting down some of the Bitcoin mining rigs due to the surge in the energy consumption due to mining, we are taking away electricity from the masses and powering these Crypto mining rigs....

Here are some economics and Carbon footprint snapshots on Bitcoin mining side by side with Ethereum mining

Bitcoin network is consuming power at an annual rate of 32TWh—about as much as Denmark.
recent stats from digiconomist(above)
https://digiconomist.net/bitcoin-energy-consumption

Proof of Work : taking the intermediary out of the mix but at what cost ?

Miners today that use the PoW consensus on the Blockchain chew and consume energy that can power a magnitude of households just to mine a days worth of Bitcoin in the US , if you compare the unflattened transaction dynamic of 13Bn per day mining throughout or the lavish 30Bn per day throughout costs we are talking powering about 4 to 5 house holds in America alone for their daily electricity consumption.

If all cryptos use POW with the market cap almost onto the 800Bn mark and treading selfishly ahead, what a world are we walking into explaining our kids about sustainability hypocrisy.

PoW is like a shield of faith as it DDoSs the bad guys and assures no double spending is done and the consensus protocol it provides replaces the crony intermediaries and central authorities.

It's was Satoshis way of telling the banks “we dont need your ledger to prove that the transaction was made from A to B” and “A”did not send the money to someone else and double spend....miners get rewarded with crypto when their block gets added to the network 

PoW is a trust manifest, but it comes at the cost of enormous amounts of electricity, block consensus takes 10 minutes for the Bitcoin blockchain and tad bit lesser for Ethereum Blockchain and the whole economics around mining is loosing its first principles mantra of low cost , fast and other decentralized attribution benefits.

Selfish mining is also something that you should to read and understand at this point Professor Emin Gun Sirer that speaks about negative and selfish mining techniques that are possible, but still making it look de-centralized.

in PoW consensus...the "Miners" get a block reward for consensus with bitcoin and Ether on their respective block chains.

....on the other hand Ethereum Proof of Stake and eventually Casper POS is like the Prius or the Tesla Hybrids that care about the economics and the sustainability around consensus, consensus is still reached ....but in a energy efficient way...also addressing the cryptoeconomics aspect of a fair share for anyone using economy of scale.

Proof of Stake is solving the below challenges with Casper before it can mainstream as a future framework of all forward looking blockchain platforms 

Solving

1. Nothing at Stake problem

2. Finality and Double Finality 

3. Economy of scale validator pool selection vs mining pool anarchies 

Layman terms understanding of the Casper Proof of Stake consensus protocol.

In the Proof of Stake protocol , forgers(miners) are chosen based on the validator pool qualification , in the Proof of Stake it’s like factored cost Auctioning where you lock up some of your Stake in an Escrow in Earnest money deposit or Security deposit mode and if the block is chosen then a reward proportionate to the Stake is the incentive payout.

This binds the forger into a deadlock so they cannot act in either a

1. Byzantine manner

2. Go offline from the validator pool

3. Refrain to selfish mining

4. Resort to anarchy with powerful mining pools (to what happens today on the PoW protocol.

The moment the forgers or miners act in a Byzantine manner their deposit or Stake is slashed and they loose a lot of Crypto for that behavior.

Ethereum plans to roll out Casper PoS in a scaled approach 

In my next blog I will talk more about those in detail 

One is the Casper FFG (Casper Friendly Finality Gadget) and Casper CBC (Casper Correct by Construction) protocols

You don’t have to go all day the way to the genesis block to verify the hash construct instead these will use more selective attribution Pareto that leads to the same consensus. 

How will the transition be and what are the risks

- functional technology feasibility risk

- implementation risks(Spec matching)

Remember to look for these references to understand more about different consensus protocols and understand to distinguish the key nuances that exist with these protocols and what’s being done to make the crypto and the blockchain world more energy efficient.

The energy (consensus protocol) is used to replace the expensive third party centralized parties (banks) and their processes/costs/mechanisms to be the trusted third party and hence it becomes very important to have a consensus protocol to compare itself as a more cost and energy efficient option to stay competitive and sustainable.

References 

1. Vlad Zamfirs podcast

2. Blockgeeks article 

3. professor Erin Gun Sirer article on Selfish mining

4.Mining pool hash distribution pie chart based on Proof of work mining consensus protocol depicting the actual problem with the centralization that could be a potential for a Byzantine attack

Bitcoin mining Pool(Hashrate distribution-shows hows centralized this has become with a 51% situation with 3 pools coming together and joining byzantine hands)

...next blog understand Casper FFG and Casper CBC

We will also visit different consensus protocols 

We will also discuss about the validator pool selection in Casper and the debate around the 250 node validator pool criteria and some of the criticisms around the consensus 

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