While the blockchain continues to be one of the most exciting emerging technology in the world today, there are still a few issues that hamper its implementation in the wider business process.
Touted as having the potential to not only disrupt but to also revolutionise the global business process, it hasn’t yet been possible to make the transition from prototype concepts to large-scale mainstream business applications. One of the major reasons for this is the fact that the technology consumes an inordinate amount of energy.
This makes the technology considerably more expensive than the processes it is trying to disrupt, replace, or revolutionise.
The enormous energy consumption of blockchains is down to the need to secure the operational fidelity of the network, protecting it from hackers. For a blockchain to be successful, the records in the distributed ledger have to be tamper-proof.
Take away the immutability of a blockchain and you are left with an expensive database. The high electricity consumption acts as a barrier shield that is used to deter would be hackers and manipulators.
According to Christian Catalini, the founder of the Cryptoeconomics Lab at MIT, the large energy required to gain control of a blockchain is more than enough incentives to discourage hackers.
However, a more cost-effective and energy efficient means of securing blockchains is required if the technology is to be applied in the mainstream business scene.
Researchers at top-tier institutions like MIT and Cornell University are carrying out studies aimed at developing more energy efficient blockchain technology solutions. Universities and Colleges aren’t the only ones doing so, as notable tech companies like IBM and Intel are also firmly invested in energy efficient blockchain solutions.
Speaking on this development, Emin Gun Sirer, a science professor and the co-director of the Cornell University’s Initiative for Cryptocurrencies and Smart Contracts said that businesses will try as much as possible to “avoid bitcoin’s waste”. The vast energy infrastructure required by large-scale blockchain implementations are counterproductive to the profitability of many business processes.
Intel and IBM have been able to develop enterprise blockchain technology solutions for some of their clients. These efforts are mainly part of Hyperledger, which is a consortium of companies that are working on developing blockchain technology solutions for business applications.
Already, Hyperledger offers five private blockchains that do not involve proof-of-work (mining activities) for validation of transactions on the blockchain.
Commenting on the non-utilization of mining algorithms, Chris Ferris, the chief technology officer of IBM’s open technology said the cost of mining would be unsustainable for blockchain applications in the business scene.
R3 is another player in the blockchain-for-business development scene. The blockchain development firm has also created its own legacy energy efficient blockchain network that is focused on the financial market.
Already, major players in the financial market such as UBS, Wells Fargo, Barclays, and Bank of America have put up equity in the project. Part of R3’s effort is the development of Corda, a private blockchain that is capable of providing robust banking functionalities.
Corda is designed to be compatible with banking regulations especially with regard to the protection of customer data that are of a particularly sensitive nature.
On the Ethereum network, there are numerous startups and blockchain-based enterprises that are actively developing sustainable blockchain technology solutions.
Consensys, one of the many software companies that develop blockchain applications for businesses on the Ethereum network is actively developing a workable blockchain scaling framework.
The Ethereum network itself is moving towards a proof-of-stake blockchain authentication protocol, a departure from the proof-of-work mining protocol.
Feature image by Nati Schwarzauger