Study Claims Bitcoin Alone Could Exceed Paris Limits, but Some Experts Disagree

A study published yesterday in the renowned scientific journal Nature warned that power consumption used to power bitcoin transactions alone could send global warming to critical danger levels specified during the 2015 Paris Agreement. The magnitude of this problem would depend on the rate of future bitcoin adoption and usage, the paper said.

The issue of bitcoin’s power consumption, necessary to complete the cryptocurrency’s Proof of Work (PoW) challenge, has been often cited in media as a critical weakness of person-to-person transactions.

The paper’s lead author, associate professor Camilo Mora of the University of Hawaii’s Department of Geography and Environment, based this outlook on the examples of historical mass adoption rates of new technologies, such as credit cards and dishwashers.

Arraying bitcoin’s potential adoption against those historical rates, the study stated that “if [bitcoin’s] rate of adoption follows broadly used technologies, it could create an electricity demand capable of producing enough emissions to exceed 2 °C of global warming in just a few decades.”

Reducing emissions to keep warming below 2 °C is already regarded as a very difficult challenge given the increasing human population and consumption as well as a lack of political will. Then came Bitcoin.

Camilo Mora, et al

 

Methods and Accuracy

Mora’s paper used 2017 as a reference year for calculating the Bitcoin network’s energy cost in terms of CO2 consumption. To calculate their figure, the paper’s researchers chose randomly from a list of suitably modern (2017) bitcoin mining hardware for every block mined, and averaged together that electricity consumption.

The team then tracked the country locations of each block produced during that year, and using a formula of average CO2 emissions in every country where the each PoW calculation was “likely to be resolved,” applied a country-specific rate of CO2 emission to each block based on average power consumption. Adding these calculations together gave Mora a figure of 69 metric tons of CO2 consumed during 2017.

This figure is far higher than some other estimates, and indeed the rate of CO2 emission coming from the bitcoin network is a highly debated subject. But, critically, Mora’s study did not derive power consumption assumptions from an estimated percentage of profits used to pay for electricity as is common, but rather directly from mining machines’ averaged consumptions specs - sidestepping one of the most contentious disagreements on this subject.

A Bitcoin Cash Fan?

The paper reckons that improvements in bitcoin mining hardware could allay some of the impact of mining, due to an increase in efficiency, but cautions that “reducing Bitcoin’s carbon footprint should not rest solely on some yet-to-be-developed hardware but include simple modifications to the overall system, such as adding more transactions per block or reducing the difficulty or time required to resolve the proof-of-work.”

The battle of bitcoin block sizes is one of the issues that led to the Bitcoin Cash (BCH) fork of Bitcoin last year, with BCH opting for bigger block sizes. Bigger blocks equate to less competition for mining power, and thus lower difficulty PoW operations.

The reduction in difficulty of the PoW algorithm, in the event that bitcoin’s popularity and adoption continues to increase, seems unlikely however, as increased price will mean increased competition to mine blocks - even after next year’s halving.

Another unknown is how the Lightning Network, an in-work offchain payment protocol layered atop the Bitcoin network, will affect all of this if it manages to succeed and gain widespread adopting. It would necessarily draw some of the workload away from the miners, as this is its precise objective; but a widespread adoption of Lightning would probably mean much more overall use of the Bitcoin network, potentially maintaining - or even increasing - current levels of mining requirement. Simply put, nobody knows what would happen.

Other arguments

The bitcoin activist Andreas Antonopoulos is often asked about environmental damage caused by running the Bitcoin network, during his talks. He typically responds in two parts.

His first response is that much energy production is wasted in certain parts of the world, and that setting up mining operations at those locations can constitute a form of “energy arbitrage.” Secondly, he points to the banking and financial system that Bitcoin could stand to eventually replace, and draws attention to the enormous amount of energy gone into supporting its vast infrastructure - physical banks, office towers, data centers, and the like.

Others have taken to social media in the same vein, criticizing the study's focus on bitcoin in particular as especially harmful.

 

Komodo to Soon Release Atomic Swap-Enabled Trading App, CTO Reveals

Cryptocurrency exchanges have been under fire so far this year, as hackers have kept on targeting them and other events hurt the confidence users have in certain platforms. Atomic swap technology is set to revolutionize the way we trade cryptocurrencies and more.

As CryptoGlobe covered, a Chainalysis report has found that 60% of cryptocurrency exchange hacks were the work of two major players, dubbed “Alpha” and “Beta.” Alpha was described as a “giant, tightly controlled organization partly driven by non-monetary goals” that appeared eager to “create havoc as to maximize profits.”

Beta, on the other hand, was described as a “less organized” player that focused more on monetary gains from their endeavors, moving money less, and waiting longer before cashing out. Together, these have reportedly stolen over $1 billion from exchanges.

Moreover, cryptocurrency exchange Cryptopia was hacked earlier this year in an attack described as “unusual” by Elementus, as it lasted longer than regular attacks, and saw hackers cash out over $2 million from decentralized exchanges.

On top of all this, crypto exchange QuadrigaCX recently went down after its founder and CEO Gerald Cotten unexpectedly passed away. Cotten was reportedly the only person with access to $145 million worth of customer funds in cold storage. The complex situation cost one crypto trader his $420,000 life savings, and is still unfolding.

While decentralized exchanges exist, their liquidity problems have seen most users stay away from them. The solution, peer-to-peer exchange, has trust-based risks, which are hard to fix without the transaction being made in person. This, as seen, carries risks.

Enter atomic swaps. This type of technology, according to the CTO of privacy-centric cryptocurrency Komodo (KMD),Kadan Stadelmann, can potentially revolutionize P2P transactions, as it eliminates the need the need for any central party.

This, he said, won’t make centralized cryptocurrency exchanges useless, as there’s room for both. CryptoGlobe caught up with Stadelmann to learn more about atomic swaps and Komodo itself.

CryptoGlobe: Can you introduce our audience to Komodo?

Kadan Stadelmann: Komodo itself is a blockchain platform that was founded a couple of years ago. Our vision is blockchain interoperability, the interconnectivity between different blockchain systems, between different communities, between different blockchain protocols, and also different technologies.

We have a varied set of different technologies and tools that together do reflect this vision that we have. As you maybe know we have decentralized exchanges, applications using blockchain technology, and some sort of smart contract system. As you can see it’s a pretty complex framework, and that basically is Komodo.

CG: Can you help us better understand atomic swaps?

KS: Sure. So there are different forms of atomic swaps, I'll just make it as abstract and as simple as possible. What I'm talking about now is the so-called "cross-chain atomic swap," this is basically the atomic swap everyone is talking about right now.

In simple terms an atomic swap would mean an exchange of coins from one person to another, without any central party involved. This is a direct line between me and you, so we can use the atomic swap protocol to exchange our tokens without any central technology. This cross-chain atomic swap is basically the idea of trading, exchanging something in a trustless way, with the help of specific mathematics and cryptography.

A cross-chain atomic swap can involve different blockchain protocols, so we can trade for example Ethereum for Bitcoin, and this trade takes place on our central computers - there's no central server like a centralized exchange. The most important aspect of this technology is that we're able to trade without anyone else involved, just me and you.

CG: What do you see in the technology's future? What potential applications can you imagine?

KS: I think this technology can cover a lot of things. Not just exchanging coins and tokens, but also exchange technology, exchanging information, and other data forms and data in general. I think atomic swaps - this technology of exchanging something in decentralized and trustless ways - opens door to the whole industry.

We're potentially talking about doctors exchanging information, Universities exchanging knowledge, making it a medium of exchange. These universities could use atomic swaps to exchange knowledge in a trustless way. I think for the technology the use cases are endless, as it's very promising.

Where I see it going is of course the financial area: trading, exchanges, etc. Those will be utilizing atomic swaps first. I see atomic swaps on smartphones, apps, and even on a smartwatch app. It's a mighty technology.

CG: Specifying cryptocurrency exchanges, how will atomic swaps affect them? Will they be an asset to them?

KS: I think it's going to definitely be an asset, something that's positive for the industry. We even see centralized exchanges developing decentralized exchange technology, take Binance for example - it's a centralized exchange building a decentralized exchange.

The biggest benefit of a decentralized exchange is the security, as trades just happen between me and you. It's very very different from a centralized exchange. I personally believe there will always be users who're familiar with the centralized exchange and will always feel more comfortable just opening a browser and entering an exchange this way. I think centralized and decentralized exchanges will likely co-exist for a couple of years, before we see hybrid forms get created.

CG: How will atomic swaps work with layer-two scaling solutions like Bitcoin's Lightning Network?

KS: [Atomic swaps] will be possible on layer-two scaling solutions, definitely, but they'll be a little bit different. Basically you would need some sort of gateway. Even though the coins are "locked" on the scaling solution, I believe atomic swap implementations could wait until the tokens arrive at the endpoint, exit the LN, and get unlocked again.

So if we did a trade and the LN was involved, it wouldn't be confirmed until the last steps were done - coins unlocked and tokens out of the second layer. We've developed something we call a trust API - while we're always trying building the system trustless we know normal users don't like to wait for confirmations, so in this case the system will allow a trade without the wait for the confirmation, or without waiting for the bitcoins to exit the LN.

I see other systems doing the same, so we would have an additional validation and confirmation layer allowing us to use the LN for atomic swapping. But it'll be different.

CG: When will Komodo's BarterDEX be live?

KS: Our decentralized exchange is live, publicly accessible, and already online. However, BarterDEX just entered the alpha testing stage two to three weeks ago and we're preparing for beta testing. We will make a public pre-release soon, however this is still a backend software, there is no graphical UI available right now.

We are planning to release a mobile solution - a smartphone trading application utilizing atomic swaps - later this year. A third-generation decentralized exchange.

CG: What's the Komodo token's role in all of this?

KS: We haven't really created Komodo as some sort of gas or fueling token for a decentralized exchange or any other technology. Our tech is 100% open and Komodo is the flagship token of the platform itself. The coin utilizes all the technologies we've built, and Komodo is more or less a "mothership," in the sense that it's the big spaceship where everything else - the other small projects - are created.

Komodo is like this big base foundation that we've laid for all the new tokens we see. We have dozens of blockchains being created with Komodo, that's its role. It's the glue that sticks dozens of projects, developers, and communities together and connects them while providing them a compatibility layer.

CG: Komodo hit a near $12 all-time high during the crypto market's peak, and now it's under $1, are you worried about its price performance, or the impact this may have on people's perspective into the market?

KS: To be honest I have no issue with the current market condition. While people say this was a really bad bear market, I think its normal as all coins are kind of pegged to bitcoin and if bitcoin goes down they all do.

At the end of the day 2018, the year everyone calls the worst crypto year, was the best one for me and every developer I know. We never had so much technology get created, we never had so many contracts and deals be made in the blockchain space. Although prices are down and Komodo along with it, the price to me is completely irrelevant. For me personally, it's irrelevant and the market should never be linked to the technology layer, they're two different things.

CG: Is there anything else you'd like to share with our audience?

KS: Yes, take a look at Komodo. It is a very promising technology, a young platform, and we've never really looked at the rest of the ecosystem as competition. If someone's following the media, we have security collaborations and vulnerability disclosure agreements.

Our big, big vision was to connect blockchain and provide this compatibility layer - and we've done it. We're open for other blockchains, users and developers to join.