Eco-friendly alternatives to Bitcoin

virtugrana (48)in #palnet • 5 years ago (edited)

Eco-friendly alternatives to Bitcoin

Warning: All content in this article is meant to be informational only. I submit the same, based on my opinion and using my words, in addition to quotes from other articles, leaving the due credits at the end. Based on this article, do your own study and invest at your own risk.

Bitcoin’s Blockchain technology is great and came to revolutionize. But, not all are wonders in the world of cryptocurrencies, especially those that use the consensus algorithm Proof of Work.

What is Proof Of Work?

Proof-Of-Work is a consensus algorithm used to confirm transactions and produce new blocks in the chain. Through the PoW, the miners compete with each other, solving “mathematical puzzles”, to complete the transactions in the network and to be rewarded.

Bitcoins mining is currently unfeasible for computers with simple hardware, as the network difficulty is very high, consequently, a greater processing power is required. By using a mining farm with ASICs, machines with powerful hardware that achieve good processing power, you can mine a relatively good bitcoin amount, but the energy expenditure is something to think about.

The energy expenditure involving Bitcoin’s mining

Recently, according to The Verge, research was done by researchers at the University of Cambridge, England, where it was concluded that the energy expenditure promoted by Bitcoin is equivalent to the annual expenditure of the whole of Switzerland.

The research was done using a Bitcoin Electricity Consumption Index from Cambridge, or CBECI. The tool used in question estimates how much energy is spent to keep the Bitcoins network running in real time and compares with other indicators.

Bitcoin is estimated to be using about seven gigawatts of electricity, equivalent to 0.21% of world supply or to the power generated by seven nuclear power plants with Dungeness capacity in the United Kingdom.

But, according to Statista, the consumption has even decreased, at the beginning of 2019. Even so, it does not stop consuming a lot of energy, compared to the means of payment of VISA.

^{https://www.statista.com/statistics/881472/worldwide-bitcoin-energy-consumption/}

^{https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/}

But, I wonder, even so, if we consider the functioning of all datacenters and the global banking system, even the car of every manager and bank employee, surely we will have a higher energy expenditure or not?

Eco-friendly alternatives

In search of ecologically friendly alternatives to Bitcoin, I found cryptocurrencies that use other consensus algorithms such as Proof of Stake (PoS), Proof of Capacity (PoC), or use DAG technology.

What is Proof of Stake?

Proof-Of-Stake is a consensus algorithm used to confirm transactions and “forge” new blocks in the chain. It consists of holding a number of coins in the wallet, leaving it open. Over time, random sweepstakes are made to decide who will be the creator of the next block.

Recently, there has been a shower of coins that use the PoS consensus algorithm in conjunction with a Masternodes network. It is important to note that this combination helps keep the network safe and prevent attacks of 51%. However, most of the new PoS / MN coins are created for the purpose of getting funds through a pre-sale, then the developers abandon the project, giving exit scam.

There are different currencies that use this consensus algorithm and various forms of PoS as well. In some, the apportionment of new currencies is proportional to the existing currencies, in others all currencies have been pre-created so each new block does not give a reward, the originator only receives the transaction rates processed in that block.

Compared to PoW, PoS is much more efficient in terms of power consumption, since it does not require computational force to solve the algorithm.

Example of cryptocurrency using PoS: PIVX

What is Proof of Capacity?

Proof-Of-Capacity is a consensus algorithm used to confirm transactions and produce new blocks in the chain.

In this case, the HD space of the miner is used as proof of capacity. There is also a draw, but the more space in the HD available, the greater the chance of being the creator of the next block.

CryptoCurrency using PoC: BURST.

What is DAG technology?

The Directed Acyclic Graph (DAG) technology consists of a mathematical algorithm, structured in “tree”, that is, non-linear, allowing infinite scalability, unlike Bitcoin’s blockchain, which is structured in a chained way.

For example: We can put as a characteristic in a DAG network, the fact that the success of the current transaction is based on its ability to validate the previous transactions. NXT, Tangle, ByteBall and Block-Lattice are popular networks that use DAG as a base.

CryptoCurrencies based on DAG technology: IOTA, DagCoin, Byteball, Nano, Banano, XNOS, Tangram.

Alternatives I’m analyzing

Nano

Nano is a cryptocurrency peer to peer, open source based on DAG technology. Offers instant transactions and zero rate. Each account has its own blockchain, using the architecture called Block Lattice, allowing semi-instant transactions, through a work test that is performed by the sender and receiver respectively.

^{Source: https://twitter.com/NanoIsGreen/status/1139427132923207680}

Banano

BANANO is a memecoin fork of NANO, but with some modifications. This cryptocurrency is open source and is based on DAG technology, too. Bottom line, zero rate, instant transactions and rich in potassium! Oh, I forgot to mention the memes?

^{Source: https://www.reddit.com/r/bananocoin/comments/94vp3n/banano_meme_design_contest_1_3rd_place_nano_vs/}

Banano Distribution

It is important to emphasize that the BANANO cryptocurrency is in distribution period. BANANO has never had ICO and is distributed freely to everyone. This is being done through fair and consistent distribution through Games Faucet. Today you can also “mine” BANANO.

Banano “Mining”

Importantly, there is this banano “mining” where you use your computational power to aid medical research through the Folding at Home software. However, this is not necessary for the operation of the network, as opposed to bitcoin. It’s just one of the means of banano distribution, whether you choose to mine or not, bananos will work anyway thanks to the basis of DAG technology.