Blockchain technology is based on a cryptographically secured, distributed networks which create immutable ledgers. These ledgers serve the purpose of imparting Trust with its users. Information stored within these ledgers is immutable and can never be modified or deleted. Every node on a network contains data from every “block” of information which is used to verify transactions on the blockchain network. Multiple “blocks” make up a “chain” to make a Blockchain.
There are many different types of blockchains with the most familiar ones being Ethereum and Bitcoin. These are two different types of ledgers which serve different functions (transactional vs smart contract) and utilize similar mechanisms for verification through specific algorithms. Verification on the Bitcoin and Ethereum networks takes place by running computations on Master Nodes to show "Proof of Work". Master nodes are rewarded with a digital asset in the form of an Ether or Bitcoin. The practice of running systems for transactional verification within the Bitcoin and Ethereum networks is called Mining. Mining is required to maintain the stability and security of the networks.
As time progresses, each Blockchain or record of transaction becomes longer, requires greater computation and increased time for verification. As transactional data increases within each block so does the necessary energy requirement. Proof of Work algorithms in a blockchain network are extremely inefficient and time consuming.
Any solutions based on Proof of Work are inherently limited and will only further perpetuate the negative effects of climate change through the use of fossil energy resources. For this reason, we steer away from conventional blockchains to prefer the utilization of purpose engineered distributed network protocols designed for optimization through reduced energy consumption and increased functionality.
Learn more about how blockchain works and see it in action within the diamond industry, which has been plagued by fraud, theft and controversy.