PoW
According to an article on WIRED.jp, Bitcoin has a design that increases the cost of participating in the network. Computers that maintain the ledger, also known as "mining nodes," are constantly required to solve complex mathematical puzzles and receive Bitcoin as a reward. However, solving these puzzles consumes a significant amount of energy, making the computers involved in Bitcoin mining highly energy-intensive. This system is intended to discourage attempts to tamper with the Bitcoin ledger and instead encourage cooperation. However, according to the Cambridge Centre for Alternative Finance (CCAF), this energy-intensive incentive system called "proof-of-work" is responsible for consuming 133.65 terawatt-hours of electricity annually for Bitcoin mining. This is more than the annual electricity consumption of countries like Sweden and Ukraine. The CCAF's report in 2020 revealed that only 39% of this energy consumption comes from renewable sources. Michael Rauchs, a researcher at CCAF, states that proof-of-work has become the "industry standard" for cryptocurrencies due to the success of Bitcoin.
To address the criticism of the environmental impact of proof-of-work, alternative systems such as Proof of Stake have been proposed. These systems allow users to earn rewards by holding and depositing tokens, but the source of these rewards and how they are provided by the operators is still not clear. Another system that aims to prevent spam emails is by charging a small fee for sending emails, as mentioned in the note.
In a tweet, it is mentioned that in a decentralized blockchain network where there is no central authority, mechanisms like Proof of Work and Proof of Stake are used to achieve consensus among distributed nodes regarding the state of the system. The rewards in these systems are determined by the protocol itself during block generation, rather than being given by the operators. The tweet also raises questions about the role of a Sequencer and the understanding of tkgshn.icon. In response to the tweet, it is clarified that even in Proof of Stake, there are predetermined rewards during block generation, similar to Bitcoin. This implies that the source of these rewards is the issuance of new coins. Overall, the note discusses the concept of proof-of-work, its environmental impact, alternative systems like proof-of-stake, and the mechanisms for rewarding participants in these systems.