Why COTI’s Proof of Trust is a Green Alternative to PoW
On May 12th, 2021, Elon Musk tweeted from his official handle about Tesla’s decision to suspend “vehicle purchases using Bitcoin.” Musk expressed concerns about the “increasing use of fossil fuels for Bitcoin mining and transactions.” This tweet sent a shockwave across the crypto market and significantly brought down Bitcoin’s prices. On May 12th, 2021, the price of Bitcoin had crossed the mark of $57,000. By June 1st, 2021, the price was hovering around $36,000, a drop of nearly $21,000.
While Musk’s tweet was instrumental in causing the downfall, concerns around Bitcoin mining’s environmental impact are not new. Bitcoin leverages the Proof-of-Work (PoW) consensus mechanism. PoW has always been known for its energy-intensive mining operations.
How Does POW Mining Impact the Environment?
According to a study done on the energy consumption of blockchain technology, the electricity consumption by Bitcoin mining per year falls somewhere between 60 and 125 TWh. It is as high as the annual electricity consumption of countries like Austria (75 GWh) and Norway (125 GWh). Not only Bitcoin, but several other high market capitalization currencies also used PoW mining, including Ethereum, Bitcoin Cash, Bitcoin SV, and Litecoin.
Mining Bitcoin through the PoW consensus algorithm is a process that involves creating a new coin using computers that solve complex mathematical algorithms or puzzles. The mining software takes about 10 minutes on average for the miners to solve the complex program and process a block. The miners use hugely powerful systems to mine their blocks and verify transactions. The running of these systems relies on electricity that often generates from fossil fuels.
The fuel consumption increases further with the increase of Bitcoin price. Bitcoin miners receive newly created Bitcoins as a reward for the work they do. The incentive of mining is higher when the Bitcoin price is high. Surging prices attract more miners to join the network, causing the power consumption to shoot up further.
One can easily find here a direct relationship between network growth and electricity consumption. It is not at all a healthy example of what an energy-efficient, sustainable model should look like. It is where other consensus mechanisms, such as the COTI’s Proof of Trust (PoT) algorithm, come into play. The crypto community is increasingly exploring these options as greener alternatives to what PoW has to offer.
COTI’s Proof of Trust: An Alternative to PoW
COTI appeared in the market as the first enterprise-grade fintech platform, empowering organizations to build their payment solution to digitize any currency to save time and money. However, when it comes to a blockchain network’s energy consumption issues, COTI’s Proof of Trust algorithm emerges as a viable alternative to the energy-intensive Proof of Work algorithm.
The COTI proof of trust consensus doesn’t rely on the inefficient and energy consuming PoW mining process, instead of mining, COTI’s algorithm assigns each network user a Trustscore and utilizes DAG to solve the scalability issue. The aim is to encourage good network behavior, resulting in lower fees, and better service quality.
For protocols that use a blockchain-based ledger, like Bitcoin, achieving scalability without increasing the energy consumption is a challenge. To solve this issue, COTI leveraged direct acyclic graphs or DAGs. COTI calls its DAG the Cluster, where each transaction is represented by the user’s Trust Score. Therefore, to become a part of COTI’s ledger, token transactions need to be attached to two prior transactions with a similar Trust Score threshold. Unlike PoW projects that linearly approve transactions, the cluster connects transactions simultaneously and asynchronically, solving the scalability issue.
Since every new transaction has to be attached to the two previous connections, the process creates a chain over time. This chain is called the Trustchain. The Trustchain algorithm leverages user Trust Scores to ascertain the amount of Proof of Trust (PoT) necessary to confirm a transaction. It incentivizes higher trust score users with a faster confirmation time. This way COTI’s proof of trust consensus helps saving energy by reducing the time of confirmation.
The PoT algorithm also controls and prevents network spamming. It also helps balance the incentives for network participants. It is not only the users that get Trust Scores assigned. COTI assigns trust scores to its nodes as well. Node Trust Scores are helpful in quickly selecting the most suitable full node without having to waste time and energy.
Overall, the COTI proof of trust consensus algorithm emerges as a viable alternative to the PoW which does not compromise on the speed, achieves scalability faster, and keeps the process seamless and trustworthy.
As a block-less and miner-less blockchain, COTI ensures scalability. Miners do not need to spend time or charge fees to code transaction confirmations. The use of DAG allows for virtually real-time and low-cost confirmation of transactions. Tokens are generated on the genesis transaction of the network and distributed to the network over time. Moreover, the absence of miners implies low energy consumption
The apprehension towards the energy-intensive PoW mining can again deliver a blow to the crypto market by bringing its value and market cap down. It is high time we start exploring alternatives like COTI’s PoT more widely.
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Technical whitepaper: https://coti.io/files/COTI-technical-whitepaper.pdf