PayPal Proposes Cryptoeconomic Incentives for Greener Bitcoin Mining
Summary:
PayPal's Blockchain Research Group, in partnership with Energy Web and DMG Blockchain Solutions, has proposed using cryptoeconomic incentives to encourage Bitcoin miners to utilize low-carbon energy sources. Eco-friendly miners would be rewarded with additional Bitcoin rewards in a system where transactions are preferentially routed to those using sustainable energy. The initiative has been successfully tested, with the firm noting increased opportunities for green miners to claim transactions.
In a bid to promote eco-friendly Bitcoin mining, global payment powerhouse PayPal has suggested financially rewarding miners via Bitcoin network layer incentives. The company's Blockchain Research Group, working alongside DMG Blockchain Solutions and Energy Web, floated the idea of "cryptoeconomic incentives" to persuade Bitcoin miners to adopt renewable energy sources, as per a blog post published on April 22. Through this experimental incentive, the company endeavors to spark further dialogue and innovative thought surrounding Bitcoin and is currently seeking industry feedback on possible enhancements.
According to the proposed plan, environmentally friendly miners utilizing sustainable energy sources would be given unique "green keys" linked to their public keys. Bitcoin transactions would primarily get directed to these green miners, attaching lower fees but including an additional locked BTC reward in a multisig payout address that can only be claimed by the green miners. The proposal explains that these green miners would be motivated to mine such transactions as they would be the sole recipients of the extra "locked" BTC reward, thus encouraging profit-driven miners to resort to low-carbon sources for the bonus BTC rewards.
The proposed solution would be supported using Energy Web’s “Green Proofs for Bitcoin” platform, facilitating miners to get accredited based on their clean energy usage and grid impact scores. These green miners can register and publicize their green keys on the platform as part of the incentive program.
PayPal's Blockchain Research Group confirmed that the proposed solution had been effectively trialed with Bitcoin miner, DMG Blockchain Solutions Inc. It undertook several low-fee transactions broadcast tests to gauge efficacy under varying on-chain transaction volumes. Dependent on transaction volume, the firm noticed that "these transactions would either take a long time to confirm or eventually be dropped by the network." This delay would provide green miners with greater opportunities to claim these transactions.
Exploring private channels such as the Lightning Network or smart contracts was suggested as an alternative method, although it presents challenges like more complicated implementation. The PayPal Blockchain Research Group concluded by stating that the proposed solution intends a balance between decentralization, ease of implementation, trust independence and incentive distribution. While Cointelegraph attempted to reach PayPal for more details on potential implementation, no immediate response was given.
Published At
4/23/2024 6:58:18 AM
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