Jun 15, 2015
Dear Grant, Congrats for the intriguing proposal! Being somewhat familiar with the Blockchain technology, I have a comment on the specifics of your proposal: You don't outline which virtual machine you want to base your cap-and-trade system on. This affects, however, its environmental effectiveness considerably. Etherum, for example, is designed to require a "proof of work" by miners (i.e. the calculation of new hashes). Only if they can provide this proof of work they will be granted shares for having created new blocks. This mechanism is supposed to be in use until a critical mass of users will be reached. Only then it is envisioned to switch to a "proof of share" mechanism. However, delivering the proof of work by solving complex mathematical problems requires vast processing capacity. The estimated minimum efficient energy consumption for Bitcoin mining in 2015 for instance amounts to the yearly energy consumption of as many as 135,000 average American homes (Economist, January 10 2015). Consequently, the cap-and-trade mechanism that is intended to reduce carbon emissions would itself produce high emissions. Have you thought of a solution to this issue? I'd be very interested. Yours, Sanna
Jun 22, 2015
Thank you for your question. I apologize for the slow response. At roughly one hundred thousand Bitcoin transactions daily, we can expect there to be over thirty five million transactions annually. That is a lot of transactions, so the energy numbers you cited make sense. Under a cap and trade system like this, however, there would be one or a few transactions per carbon emitting company. The number of transactions would pale in comparison, as perhaps a few thousand companies might participate. This means fewer blocks and fewer nonces to solve for, which means less energy consumption. If I have not been clear, or I have misunderstood your question, or I am in error, please do not hesitate to reply. Best, Grant
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