PayPal Backs Crypto Solution for Greener Bitcoin Mining

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PayPal Backs Crypto Solution for Greener Bitcoin Mining
Credit: © Reuters.

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  • Paypal research proposes economic incentives for sustainable Bitcoin mining.
  • “Green miners” using clean energy get priority for certain transactions.
  • Locked rewards in transactions incentivize miners to go green.

PayPal’s Blockchain Research Group in collaboration with Energy Web and DMG Blockchain Solutions is proposing a novel approach to address the environmental concerns surrounding Bitcoin mining. The research uses the power of cryptocurrency’s core economic principles to incentivize miners towards sustainable practices.

Bitcoin’s robust security relies on its Proof-of-Work (PoW) consensus mechanism, but this process comes at a significant cost – immense energy consumption. This new research proposes a system that integrates seamlessly within the existing PoW structure, promoting a shift towards clean energy usage by miners.

The system identifies miners utilizing sustainable energy sources as “green miners.” These miners are assigned unique public keys, referred to as “green keys,” which act as identifiers within the network.

Transactions with lower fees are then routed towards these green miners. However, a key element differentiates these transactions: a portion of the mining reward for these transactions is “locked” in a special multisignature payout address.

This locked reward becomes the crucial incentive for green miners. Only miners with green keys can unlock and claim this additional reward, creating a strong economic motivation to prioritize transactions that specifically support sustainable mining practices.

The research emphasizes that this approach does not require any fundamental changes to Bitcoin’s core functionality. Instead, it builds upon the existing economic framework to influence miner behavior.

The successful implementation of this system has the potential to significantly improve the environmental footprint of Bitcoin mining. Furthermore, this research demonstrates the power of cryptoeconomic incentives to promote positive change within established blockchain networks. The researchers hope this approach can serve as a model for implementing similar sustainability-focused solutions across various industries moving forward.

The post PayPal (NASDAQ: PYPL ) Backs Crypto Solution for Greener Bitcoin Mining appeared first on Coin Edition.

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