![]() Like in proof-of-work, incentives have been stacked against cheating – but this time there are no thrumming, electricity-hungry mining computers involved: one can theoretically set up a validator from a laptop. ![]() An additional assumption is that the price of ether would plummet when an attack was reported, so pulverising the value of the attacker’s stake. “So if there's $10 billion (£7.3bn) worth of stake securing the chain, I would need $20 billion (£14.5bn) in order to be able to do any meaningful attack on the chain,” he says. Only 39 per cent of that electricity comes from renewable sources, a 2020 report by the University of Cambridge found.īen Edgington, a project lead at ConsenSys – a software developing company involved in the roll-out of Ethereum’s Eth.2.0 upgrade, which will introduce proof-of-stake alongside other major changes – says that while a 51% attack is still conceivable under proof-of-stake, it would require attackers to stake twice as much ether as the rest of the network combined. But this electricity-based incentive system, called “proof-of-work”, means that today Bitcoin mining consumes 133.65 terawatt-hours a year, more than the annual consumption of countries like Sweden or Ukraine, according to the University of Cambridge’s Centre for Alternative Finance (CCAF). In so doing, these (fairly expensive) computers consume a lot of electricity, a set-up intended to render attempts to tamper with the Bitcoin ledger too onerous and encourage cooperation instead. To stave off that risk, Bitcoin is designed to make participation in the network expensive: computers that upkeep the ledger, also called mining nodes, are required to constantly try to crack daunting mathematical puzzles, receiving Bitcoin rewards upon solving them. One potential pitfall with that model is the “51% attack” scenario, in which a malicious actor deploys a battalion of sock puppets to take over a majority of the network and vote through transactions that should not be approved, for instance because a user does not own the bitcoin they want to spend. Instead it is underpinned by a decentralised swarm of computers collectively maintaining a historical log of payments – the Bitcoin blockchain – and updating it periodically via a process akin to voting to approve new transactions. The first and most popular cryptocurrency, Bitcoin, is designed as a peer-to-peer payment system that does not rely on any single arbiter – like a bank or a financial intermediary – to validate payments between users. That comes hardly as a surprise to anyone familiar with how cryptocurrencies work. (You can hardly get more mainstream than John Cleese, or Christie’s.) Yet, digital artists who have been making a killing by piggybacking on the nifty craze have reportedly been grappling with a creeping feeling of guilt: their new way of monetising their work is wasting energy and damaging the climate. Non-fungible tokens or NFTs, units of crypto purportedly acting as simulacra of digital objects ranging from digital artworks to in-video-game weapons, to tweets, to farts, have exploded in notoriety, seeping well into the mainstream. You just have to doom-scroll through your Twitter feed to realise that the last few weeks have been a turbulent period in cryptocurrency. Andrey Rudakov/Bloomberg via Getty Images
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