There is a fundamental misunderstanding that Proof-of-work consensus mechanisms are inherently computationally, unscalable and excessively energy-consuming.
Proof-of-work blockchains as they were originally designed, and as promoted by the BSV Blockchain Association, aim to achieve scalability while ensuring security and interoperability within an energy-efficient system.
Enabling scalability in proof-of-work by increasing the number of transactions processed per block per second inherently leads to a notable reduction in energy consumption. As more transactions can be accommodated within each block, the energy expended per transaction naturally decreases, resulting in a more energy-efficient system overall.
Blockchain vs. Distributed Ledger Networks
Notably, proof-of-stake networks such as those promoted by Ethereum cannot accurately be classified as blockchains. Instead, they are distributed ledger networks that imitate the structure and processes of genuine blockchains while lacking security and scalability.
By comparison, the BSV blockchain is a public permissionless blockchain that adheres to the original Bitcoin protocol rules which utilises proof-of-work consensus.
As such, it presents a viable alternative to Bitcoin Core (BTC), as well as to other proof-of-stake blockchain protocols, and should be considered as a benchmark for proof-of-work-based blockchains, instead of another energy-consuming proof-of-work-based Bitcoin implementations (e.g. BTC).
Proof-of-work: a common misconception
One of the biggest misconceptions around proof-of-work consensus mechanisms has come about due to the increasing popularity of blockchain and crypto-asset trading. As the volume of activity involving tokens like BTC and Ether (ETH) grows, it has become slower and costlier to record and secure each transaction. This has been dubbed the so-called ‘blockchain trilemma’ and is often used as an excuse for a network’s inability to provide the unmatched properties of proof-of-work.
This blockchain trilemma theory suggests that while a perfect blockchain is decentralised, secure, and scaled, no such blockchain exists because to have two of these three properties, you have to sacrifice one. There have been various efforts to fix the problem, but all of them either make the system more vulnerable to bad actors or water down the model that’s key to the appeal of a blockchain.
However, this thinking fails to take into account the intended use case for proof-of-work. With proof-of-work all three properties are achieved because they exist simultaneously, and the more transactions there are on the network, the more decentralised and secure it becomes.
The design of proof-of-work blockchains aims to achieve scalability while ensuring security and interoperability to enhance and potentially replace traditional value exchange. By scaling proof-of-work to accommodate a higher number of transactions per block per second, energy consumption is significantly reduced by default.
Therefore, the idea that a mere change in consensus mechanism will automatically offer a more sustainable, affordable, and scalable protocol than proof-of-work is simply not true.
Blockchain regulation and getting things right
These considerations are especially important as regulators in the EU and US look to align technologies such as blockchain with their climate goals.
The BSV Blockchain Association is pro-regulation so in the spirit of technological neutrality and taking into account (1) objective technological facts, (2) the energy efficiencies generated in scale by environmentally benign proof-of-work protocols like BSV, and (3) the cost efficiencies achieved in high throughput operations, we advocate for the need to establish unbiased benchmarks and objective criteria in any study that will be introduced from the side of regulators that assess the environmental impact of different DLT options.