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di June 16, 2020 0

Bitcoin Network Consumes a Ton of Electricity

The awareness and adoption of cryptocurrency is at an all-time high where even governments and financial institutions that have underestimated the fintech revolution as an internet bubble have come to accept the benefits of decentralized technology. Bitcoin, the king of cryptocurrency that started it all, is now seen as a powerful financial tool and a parallel investment vehicle. However, one major aspect of bitcoin is that the enormous energy consumption for transaction verification and securing the network has been the cause of many people's anger.

The high energy consumption of the bitcoin network is directly related to the mining consensus of Proof-of-Work (PoW).

A brief history of PoW and how it works?

PoW is the first consensus algorithm that was introduced by Satoshi Nakamoto (the creator of Bitcoin) in 2008, when Bitcoin was created. This algorithm was mentioned in the Bitcoin white paper by Satoshi, but this concept was introduced earlier in 2004 by a computer scientist, Hal Finney.

There are many questions about the PoW algorithm about how it works and how much energy is consumed. Well, the main purpose of PoW is to create a new block and to confirm all transactions. It contains a record of all transactions related to Bitcoin, plus it is fully decentralized and promotes transparency. It is true that this consensus algorithm uses a lot of energy which means it involves very high costs. Although mining machinery has evolved a lot over the past few years and claims to be more energy efficient, it still consumes a lot of energy.

The PoW mining consensus ensures equality because it offers equal opportunity for every miner who wants to mine the next block, and once the block is mined, he distributes block prizes according to the energy input made by each miner in finding the next block. This algorithm is very different from another popular mining consensus called Proof-Of-Stake (PoS), where the network selects the next miner to find a block. This mining consensus might reduce electricity waste but is not as stupid as PoW.

Back in 2018, Vitalik Buterin, one of the founders of Ethereum, the second largest cryptocurrency, called PoW a tragedy. Buterin quotes that PoW uses billions of dollars of electricity every year and there is still so much theft and fraud.

Bitcoin energy consumption and what is the equivalent?

Through several types of research, it is estimated that Bitcoin mining actually uses around 1% of total world energy consumption. Bitcoin mining is a process through which new coins are generated and carried out by solving very complex computational equations with the help of some very special computers. Along with adding new Bitcoin to circulation, mining also ensures network security. To make more money through the mining process, more miners have been added to the network, which in turn leads to higher energy consumption because all miners will work constantly.

Researchers at Cambridge University jumped into the debate about energy consumption of Bitcoin and conducted the same research. In their research, they found that the complete Bitcoin network around the world consumed more than 7 gigawatts of electricity and for a full year, total energy consumption was around 64 terawatt-hours.

They have compared this energy consumption with various countries and found that the total energy consumption of the global Bitcoin network is more than the energy consumption of all of Switzerland during the same time period. The research team has also created an online tool, the Cambridge Bitcoin Electricity Consumption Index (CBECI) that is there to find out how much energy is needed by the Bitcoin network to maintain the network.

The Bitcoin network actually uses renewable energy

Every time the Bitcoin energy consumption debate is revealed, there are many claims that Bitcoin emits a high amount of carbon dioxide. Some people even claim that these emissions are the same as those emitted by many big cities like Las Vegas. So the question is is Bitcoin really an environmental disaster? According to a researcher, Robert Sharratt, Bitcoin is not a danger to the environment and it undermines this myth that is generally spread by most people. He has dispelled many people's doubts about the energy consumption and carbon footprint associated with cryptocurrency. He accepted the fact that Bitcoin or other cryptocurrency did use a lot of energy but in any case it was not comparable to what many people predicted. Sharratt also explained that crypto uses the world's largest computer network so that the carbon footprint associated with it is truly moderate. He further explained the benefits of using cryptocurrency and how to promote wealth equality.

Another study by Coinshares in June last year revealed that although energy consumption from the Bitcoin network was high, the carbon footprint dilemma was artificially created because the energy consumed by the bitcoin network was generally clean and renewable energy. CoinShares publishes a report stating that most of the energy consumed by Bitcoin comes from natural resources such as Hydro, Wind and Solar power. He claims that 74.1% of the total energy consumed by Bitcoin is renewable which is very similar to other large scale industries.

The safest network

Despite the fact that there is a large energy consumption in Bitcoin, many people still prefer to hold fast to Bitcoin. The reason is the security this network provides. Over the past few years, it has been seen that the Bitcoin network is very safe and the main reason for this security is the blockchain. Bitcoin is supported by Blockchain and every transaction that occurs on this network is encrypted with a blockchain which adds extra security to the network. Blockchain helps keep all users' personal information completely safe and protect their privacy so that there is no possibility of fraud or hacking. Therefore, it is said that Bitcoin is the safest network than before.

Conclusion

Since we have discussed all of the energy consumption of Bitcoin and the use of renewable energy, the end note is that Bitcoin has now emerged as one of the best digital currencies. Although it consumes a lot of energy, it is a fact that is proven through many studies that the majority of energy consumed by Bitcoin is renewable. Therefore, it is very clear that Bitcoin is not harmful to the environment as many have claimed.
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di December 22, 2019 0

Ethereum to See Another Network Upgrade 'Muir Glacier' on January 1


Just after the recent Ethereum Istanbul Hard Fork, which happened at block number 9,069,000; a report today confirmed another upcoming block upgrade for the network. 

The Ethereum Foundation announced in a blog post that the network would undergo a scheduled block upgrade on Wednesday, January 1, 2020. This upcoming network upgrade is known as Muir Glacier.

The new upgrade is said to activate on the Ethereum Mainnet at block number 9,200,000 by the above-mentioned date. Meanwhile, this date, according to the report, is subject to change because of variable block times and timezones.

For Ethereum user or ether holder on exchanges, mobile or web wallet service like Coinbase, Binance, Metamask, MyEtherWallet, Ledger, etc. The report noted that they need not worry about the upcoming upgrade unless they are urged to take any action by any of these entities.

The Muir Glacier Upgrade Explained

Muir Glacier, unlike Istanbul, features only one Ethereum Improvement Proposal (EIP), which is EIP 2384. Istanbul, on the other hand, came with about 11 EIPs; however, six of this figure was later implemented.

While giving details on the development, the Foundation explained; Muir Glacier's EIP is meant to bring delay in difficulty bomb for another 4,000,000 blocks or approximately 611 days.

According to the report, the Core Devs, when planning for Istanbul, estimated that the bomb wouldn't be noticeable until mid-2020. However, it happened that their estimation turned out to be false.

The difficulty bomb was noticed again on October 5, at block number 8,600,000; resulting in an increase on average block time. Now, it is around 14.3 seconds since block number 8,900,000.

Notably, the development led to the need for another upgrade to bring delay in the difficult bomb.

According to the Ethereum Foundation, this same approach was initiated on Ethereum in the past, adding that:
"There was a discussion about changing or removing the difficulty bomb, but due to the short time frame a decision needed to be made to preserve short block times, the Core Devs decided to move forward with this simple change as we have done before and commit to addressing the Ice Age in a more permanent way in the future."

Does Ethereum’s Muir Glacier Upgrade Affect ETH Holders?


Ether holders that make use of exchanges, web wallet service, mobile wallet service such as Coinbase, Kraken, Binance, MyEtherWallet, Metamask, Ledger, Trezor and more, need not worry about the development unless they are informed about taking additional steps.

However, anyone running an Ethereum node would need to upgrade to the latest version before Wednesday, December 30.
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di September 24, 2019 0
https://www.coincryptoasia.com/2019/09/comprehending-ethereum-great-idea.html
Engineering drawings Ethereum - coincryptoasia.com

What Is Ether?

Summary

Ether (ETH or Ξ) is the original cryptocurrency used on the Ethereum network and is used to compensate miners who secure transactions. A planned increase to the Ethereum protocol in 2019-2021 will replace mining with a computational cheaper Proof of Ownership mechanism that will be secured by the validator, who is also expected to receive proportional compensation in Ether. Ether also has many current use cases, such as store of value (eg in loan collateral), medium of exchange (eg in trade and payments), and account units (eg in digital markets).

Ether Usage Case

Network Usage
Ether is required to transact on the Ethereum Blockchain network.

As explained in the gas section, each transaction that occurs on the network requires a specified amount of gas, which is the unit used to measure the computational power needed to process the transaction. To process the transaction and put it in a block, the miners are expected to be compensated for this task. This is achieved by setting the price of gas with each transaction, which is the cost of 1 unit of gas, denominated in Gwei (1 ETH = 1,000,000,000 Gwei).

For example, when you simply send ETH from one account to another, this costs 21,000 gasoline. If you set the price of 1 Gwei gas, this transaction will cost 0.00000021 ETH.

Saving Value

Ether, the original currency of the Ethereum network, derives its value from various factors. This is used in the Ethereum network to perform various functions, including:

Payment of Ethereum transaction fees is available as 'Gas', used as collateral for various open financial applications (MakerDAO, Compound), can be lent or borrowed (Dharma), received as payment by retailers and certain services providers use it as a medium of exchange for buy Ethereum-based tokens (via ICOs or exchanges), crypto-collectibles, in-game items, and other non-equivalent tokens (NFT) that are obtained as prizes for completing prizes (Gitcoin, Network Bounties). In the future, in Ethereum 2.0 / Serenity, users will be able to become validators and can help secure networks by providing computing resources and locking 32 Ether per validator. Because of this, it is hoped that Stake Evidence will lock in a large amount of Ether supply in circulation. There was also discussion around introducing a 'fuel-cost' model in which the percentage of Ether used to pay transaction costs would 'burn' and thus reduce Ether's circulating supply.

Behind the utility value, Ether also has a speculative value. This is the value derived from speculative activities (such as trade and investment) which currently accounts for most of the value behind all crypto assets. As observed in 2017, crypto assets can attract huge speculative interest, with some assets increasing in value 1000x in just a few months. This speculative interest often brings new capital into the ecosystem which can be reinvested into various verticals, but can damage the short-term market sentiment of all crypto assets.

Can't the token on Ethereum be used instead of Ether?

Theoretically, yes. Practically, no. The concept of using another digital asset to secure the Ethereum network is called 'economic abstraction' (a good primer can be found here. This will involve miners/validators who receive tokens other than Ether in exchange for adding valid transactions to new blocks.

It is very unlikely that the Ethereum protocol will implement economic abstraction because it has the potential to reduce blockchain security by compromising Ether value.

How can a valuable Ether help secure a network?

In the Proof of Work system, miners compete with each other to find blocks and are therefore rewarded for their work (in the form of the protocol's original crypto assets). When asset prices increase, naturally it brings in more miners, which then increases the difficulty of the network. As network difficulties increase, it becomes increasingly difficult for miners to find blocks that produce large-scale mining operations (usually called "mining agriculture") to be one of the only profitable ways to mine on a Proof of Work network (once reaching a certain size). Miners can also join the 'mining pool' to increase their chances of finding blocks and thereby increase their rewards.

At present it will cost individuals or groups large amounts of money to successfully attack or control the Bitcoin or Ethereum PoW blockchain

When Ethereum transitions to Proof of ownership under Ethereum 2.0, it is hoped that users will be able to bet 32   Ether per validator and receive prizes for their work in additional Etheric forms (at a dynamic publishing level, discussed later in this essay).

Under Proof of Stake, the cost to attack Ethereum will be linked to Ether cost. Instead of using energy-intensive mining (as in Proof of Work), validators will "risk" Ether, and will lose some or all of their shares if they attempt to behave fraudulently. The more validators with Ether secure the network, the more Ether an attacker needs to buy to carry out attacks. Such an attack is likely to quickly increase Ether's price and hence make it more expensive for the attacker.

Payment tool

For something to function as money in an economy, it needs to act as a good medium of exchange (MoE), account unit (UoA) and store of value (SoV). Ether is used as a medium of exchange in the Ethereum economy for various applications, with dApp providers accepting it in return for equivalent / not-narrow tokens, or other services. It is also used as an account unit by various parties (including companies that have raised Ether through ICO). Finally, Ether has historically been used as a store of value, with investors and speculators buying Ether for investment purposes, given its relative scarcity, predictable supply growth, and default utility.

An object (physical or digital) usually has to display five different attributes in order to be considered money: portability, durability, shareability, functionality and established history (see Lindy effect). Ether is very portable (because it's digital), durable (again, because it's digital), can be shared (up to 18 decimal places), but has limited equivalence because ETH tokens can be exchanged with each other, but accounts / addresses can be entered in a list black easily. Privacy protocols such as zk-SNARK will eventually increase this property for Ethereum.

Ethereum has been operating since 2015 and continues to build a strong history. The Ethereum (and Ether) network has been functioning as expected for 99.99% of its life. Other 0.01% included the survival of DAO, several large smart contract hacks, various protocol-level exploits, Shanghai DoS attacks, constant negative comments from the wider crypto community and bear markets (including a recent 94% price reduction).

In addition, Ether has additional properties such as sensor resistance, without permission, pseudonym, and can be operated with other crypto networks.

The crypto asset supply scheme is being hotly debated among various parties (especially those in the Bitcoin community) and currently there are two main approaches: limited supply (such as Bitcoin) or low publishing rates, predictable and difficult to change (like what planned for Ethereum 2.0).

In Ethereum 2.0 (with Sharding and Proof of Stake implemented), while a low inflation rate will always guarantee validators are valued to secure the network, it suffers from the fact that it can weaken Ether values   for those who are not validators. In fact, this was offset by Ether being released from supply that circulated through its influence, various open financial applications, cost cutting, and people lost access to their Ether.

Resources: ethereum.org

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