Adding value but inefficient and damaging to the environment, will Bitcoin work out in the long run or is a Proof of Stake system the solution?
Source: Cloackcoin , Author: Posted by BI-ME staff
Posted: Mon January 8, 2018 1:02 pm

INTERNATIONAL. Background: Bitcoins are created by solving highly complex computational tasks, and the computing power provided by them. This requires special computers with expensive, extremely fast processors, which have been specially installed for this purpose.

To incentivize these acquisition costs, to mine bitcoins and thus to operate the network, the procedure Proof of Work (POW), better known as Mining, was established.

With additional Bitcoins, the network rewards the miners for their efforts. In this way, not only the hardware costs but also the costs for the enormous energy consumption are amortized. A method that pays off for the miners.

Due to the bitcoin’s huge value increase, this year (2300%) and its prospects miners are springing up like mushrooms. Whole mining farms are being built. A new gold rush. 

According to a study by the University of Cambridge 59% of bitcoins are mined in China. Especially in northern China. Bitmain Technologies, the leading mining hardware manufacturer, is based there and operates its own mining farms.

In the north of the country, as well as in neighboring Mongolia, an oversupply of coal-fired power plants, results in excess capacities and state subsidies for electricity in these regions. Thus, one kilowatt-hour costs only four cents and thus forms the most economical variant of mining.

Despite the environmental consequences and the inefficiency of the bitcoin transaction system, its value increases strongly. Due to the frightening eco-balance, it reaps a lot of criticism. 

The crypto-analytics platform Digiconomist states that the energy cost for a single Bitcoin transaction betrays 215 kilowatt-hours. Enough electricity to supply an average US-household for a whole week, or to run a refrigerator for a full year.

By the progressing Bitcoin production and its associated scarcity of Bitcoins increases, so does the complexity of the computing processes and thus the energy consumption. Currently, 0.12 percent of the world's energy consumption is used to generate bitcoins.

According to forecasts, bitcoin’s power consumption in July 2019 will already be equivalent to the amount of the entire US’s at the present time. Already in 2020, the bitcoin's power consumption will be equal to that of the entire world at the present time. Considering the inefficiency of the system an unacceptable development.

Currently, around 400,000 transactions are placed worldwide per day. This figure illustrates the inefficiency of bitcoin’s system, which is far below the capabilities of similar services, such as VISA (approximately 150 million transactions/day) and PayPal (approximately 5 million transactions/day).

Inefficient and damaging to the environment, but adding value. Will this bill work out in the long run?

There are greener, efficient and not less lucrative alternatives. Some coins offer Proof of Stake system (POS). In this process, it is not the rendered, energy-intensive computing power of the user that plays the key role, it is only the amount of coins in his possession.

It allows you to process significantly more transactions per second and offers the owner an annual not inconsiderable interest on his coins in addition to the potential price gains. Interest rates vary from coin to coin.

A very good example is Cloakcoin (CLOAK).

Cloakcoin offers an annual interest rate of 6% and offers further rewards. The Enigma fee for anonymous transactions of currently 1.8% is divided among all supporters of the Enigma transaction. Thus, you can easily and risk-free receive 6% +Share of 1,8% on your deposit. Plus, the potential price gain.

Example - Initial situation: Purchase of 1000 CLOAK in July 2017 + 6% Staking; Calculation of the development until the present day (07.01.2018).
07.07.2017 = 1000 x $7,85 = $7850
07.01.2018 = 1000 x $30,96 = $30960 + 30 x 30,96 (= $928) = $ 31888

The example shows that you can earn 60 CLOAK per year if you stake 1000 CLOAK (Regardless of compound interest). An investment 6 months ago ($ 7850) would have turned into a present value of $ 31888 (excluding compound interest). The mere staking would have yielded $ 928. A pricely sum. 

Clearly, a very good reason to stake coins like CLOAK. The functionality corresponds to the interest on a bank balance and is at the same time environmentally friendly.

The cryptocurrency CLOAK protects the privacy of the user and guarantees secure transactions with a maximum processing speed of 60 seconds. Its heart is the payment system ENIGMA, which prevents transactional tracking and thus preserves the anonymity of the users and their transactions.

Click here to read the previous CLOAK article. 

Photo Captions:
1. (above)  The cryptocurrency CLOAK protects the privacy of the user and guarantees secure transactions with a maximum processing speed of 60 seconds
2. (inset)  Bitcoins - For illustrative purposes only (File photo)

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Disclaimer: This press release is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

 

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