If you have never heard of the blockchain technology, you probably have lived under a stone for a little while. Investors are throwing millions at cryptocurrencies, companies are heavily seeking blockchain applicable business cases and even the average man is able to make a fortune trading cryptocurrencies, overnight. But does blockchain only lead to winners? Or may there also be any downsides related to the blockchain technology? In this blog I would like to share an interesting article that touches upon one of the downsides of blockchain enabled cryptocurrencies.
The following article (https://digiconomist.net/bitcoin-energy-consumption) reflects on an index that measures the amount of energy used by computers maintaining the bitcoin network: the Bitcoin Energy Consumption Index. On average, every 10 minutes ‘miners’ add new sets of transactions to the Bitcoin ledger. These transactions are being authorized by the cryptographic code and require computers to process them.
What turns out is that Bitcoin currently uses about the same amount of electricity as the entire country of Azerbaijan. Compared to another payment method, Visa, Bitcoin uses more than 40 times the energy that Visa uses in order to handle its transactions. Thereby, with 82.3 billion transactions per year, Visa handles a lot more transactions than bitcoin does. Bitcoin is not the only extensive energy consuming cryptocurrency. A same index is available to measure the energy consumption of Ethereum: the Ethereum Energy Consumption Index. This index shows that Ethereum uses more units of electricity than countries like Cyprus and Combodia. This, in my opinion, makes blockchain enabled cryptocurrencies not a very sustainable method of handling transactions.
If you are interested in this topic, the article ends by sharing some related articles reflecting on the energy consumption of Bitcoin and other cryptocurrencies. Please feel free to share your thoughts on this topic and the particular article below.
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