Potential solutions for making cryptocurrency more
Cryptocurrency offers the world a transformative new financial instrument. It’s the first global currency. The currencies themselves are encrypted strings of data that relate to a single unit of currency. It’s digital money that’s organized through a blockchain. The blockchain is the ledger that stores transactions, and it’s built using cryptography that’s impossible to change after transactions are created. While there’s considerable benefits with cryptocurrencies such as Bitcoin, the process of creating new coins comes with environmental costs. Pushing the industry towards a more sustainable future will require a host of changes and new developments.
Mining requires individuals to solve complex mathematical puzzles with special devices called application-specific integrated circuit devices, or ASICs. Miners work together to pool computing resources to solve the puzzles faster, because the first miner to successfully complete the algorithm receives a certain amount of the Bitcoin’s value. The difficulty of mining changes over time. In the earliest days of Bitcoin, someone could run a mining program from their PC and create a meaningful number of coins. As the network grew and more people and groups took up mining, the algorithm for Bitcoin creation also grew in complexity. The system is designed to find a new “block” every 10 minutes. If there are millions of miners instead of thousands, then the difficulty must increase exponentially to hit that 10-minute target.
The downside to the ever-increasing mining process is the required energy consumption and mixture needed to power the mining equipment. Thankfully, there’s new developments in technology, regulations, and the promise of newer types of mining that can push the industry towards a more sustainable future.