Thursday 10 June 2021 5:02 pm

Decentralised mesh networks as an answer to Bitcoin’s inefficiency

Bitcoin’s “Proof of Work” (PoW) is under the microscope, and for once it’s not about anonymity, security or whether the original cryptocurrency is set to disrupt traditional finance. It’s about an environmental footprint.

El Salvador has just become first in the world to make Bitcoin legal tender. Other high-ranking Latin American politicians (from Paraguay, Panama, Brazil, Mexico and Argentina) have since called for a similar adoption.

READ MORE: More countries line up to make Bitcoin legal tender – but which one will be next?

It seems like a good idea to offer to these nations in Latin America – and other countries – a viable crypto-based payment alternative that would have the same benefits without the environment-damaging skeletons in the closet.

As Bitcoin’s consensus algorithm has become increasingly difficult and the currency has exploded in popularity, the amount of energy it requires to mine new coins has grown exponentially. From a group of enthusiasts running miners on normal desktops, the mining industry’s consumption has reached a level where it uses more power than the whole of Argentina.

Of course, Bitcoin does not need all this power and equipment to sustain its decentralized and immutable nature. 99 per cent of this energy consumption results from its trillion-dollar valuation, that generates fierce competition – an endless arms race between professional players to mine now extremely expensive coins using the PoW process that damages our planet.

This topic is the subject of much discussion today, both in the media and among concerned institutions. Elon Musk, Cambridge University and a variety of top media outlets have legitimate concerns about BTC’s environmental impact. The estimate of “carbon neutral” mining being around 39 per cent leaves 61 per cent to be based on burning fossil fuels (note that some estimate that 75% of the world’s bitcoin mining is done in China where this fossil fuel is most likely coal). Therefore, the US Secretary of the Treasury, Janet Yellen’s statement that Bitcoin is “extremely inefficient” for making transactions holds weight: PoW mining harms the environment by increasing CO2 levels.

What can the crypto world do about it?

Regardless of its current status, Bitcoin’s original purpose was to be a free peer-to-peer electronic cash system, independent of governments and corporations. This same purpose can be achieved by other cryptocurrencies with a greener approach, such as using “Proof of Stake” (PoS).

However, there is a group of green cryptos powered and backed by the Internet itself. These are “mesh currencies” that address actual social problems at the same time as answering the need for electronic cash.

Mesh networks

Today, Internet connectivity is more critical than ever. Most of our daily lives have moved online: payments, communications, work and entertainment all take place over broadband and mobile connections. The growth in demand for robust communication is so fast that it’s disrupting our lives.

In response, the Internet itself is evolving. And it’s changing so quietly it’s almost unnoticeable.

“Broadband providers are laser focused on making sure the innovative networks they build and manage are ready to accommodate a prolonged reliance on telework,” US Telecom Chief Executive, Jonathan Spalter said in an open letter to Congress. The Internet slowed noticeably during the coronavirus outbreak there, and spikes in demand and glitches have been reported in China, in the US and Europe. The internet’s current capacity is clearly not enough to cope with emergency demand right now, let alone all the incremental increases coming as industry, manufacturing, residential and transportation systems connect more.

As that demand grows and the strain on the Internet increases, innovative responses appear. Mesh networks are one of those responses.

Many consumers and businesses wouldn’t think of their Internet connection as something they can monetize, and that revelation has been both inspirational and aspirational. Founders of mesh networks believe that we can grow a large community of people who want to leverage the opportunity to monetize their Internet connections.

These projects use blockchain and mesh sharing to combine routers and computers in a big bandwidth-sharing network. They want to create  worldwide decentralized Internet governed by the community, replacing the centralised ISP structure we’re all familiar with. Thankfully, users don’t need to be a mesh/crypto enthusiast to join in: the vision of decentralized mesh projects is that if you have the technical capability to point an antenna and connect a cable, you should be able to become part of the internet. Any type of user can support the network and become an Internet prosumer.

Mesh projects that use crypto and blockchain could be the ideal alternative option for building a new Internet that people will actually want and would be able and eager to use in an efficient and decentralized way.

Helium: Proof of Coverage

Probably the most popular decentralized mesh network today is Helium, which calls itself the “People-Powered Network”. According to Verdict, the network already has 28,000 live hotspots in 3,800 cities worldwide. Helium aims to provide decentralized 5G connectivity and plans to develop partnerships with MNOs. Importantly, Helium also wants to connect any LoRaWan IoT devices and the company demonstrates itself as IoT.

From the mining/environmental point of view, Helium has a unique consensus protocol based on “Proof of Coverage”. Miners who join the network provide cryptographically wireless network coverage and earn rewards based on Byzantine-tolerant consensus.

The Helium White Paper describes the algorithm thus: “The Miners who are providing wireless network coverage in a cryptographically verified physical location and time submit proofs to the Helium network, and the Miners submitting the best proofs are elected to an asynchronous byzantine fault tolerant consensus group at a fixed epoch. The members of the consensus group receive encrypted transactions submitted by other Miners and form them into blocks at an extremely high transaction rate. “

In other words, the network’s energy consumption depends on how many active nodes are part of the mesh network. There’s far less extra work required to mine new blocks and each node participating is also providing coverage, using energy more efficiently.

PKT: Proof of Bandwidth

PKT is another popular decentralised network, in this case based on the PacketCrypt blockchain. PKT representatives think that “The only reason why Internet access is expensive and controlled by the cable and telephone companies is because setting up an ISP is hard. PKT is designed to lower the bar of entry to become an Internet Service Provider (ISP).”

The PKT network is based on the PKT blockchain, which is based on PacketCrypt Protocol.

The project aims to create a new Internet that doesn’t focus on centralised telecoms and is “an open source community with free and open management”, with a strategy to build decentralised VPN services, decentralised ISPs and other services for Web 3.0. PKT positions itself as self-organised by voluntary association, remaining informal and light on bureaucracy in the same way as Linux or the v8 Javascript engine.

For the environment, the best part of PKT is that the setup uses far less power far more efficiently because it uses a unique “Proof of Bandwidth” consensus algorithm.

Proof of Bandwidth mines PKT Cash, the currency part of the whole, and is still technically a PoW algorithm, called PacketCrypt. But the work it does is useful because it is based on a bandwidth-hard function, ensuring bandwidth is maximised across the mesh network. Participants earn PKT Cash, which is used to pay network nodes for their bandwidth while also helping the Internet run better, with privacy-first censorship resistance and smarter, faster routing for a cheaper price. It’s a similar concept to the solar power model, where users harness energy from the sun and both use that to offset their energy costs and monetize the excess by selling back to the grid.

In short, Proof of Bandwidth outshines most other algorithms for two reasons: it does useful work and miners are also a part of the mesh, increasing network coverage and maximising bandwidth usage while using very little extra power than their router and device already needed.

PKT vs Helium

Helium is not only a mesh network, it’s also an IoT network that works with any home device: washing machines, fridges, doorbells and so on.

PKT is more a fully fledged network based on CJDNS, to allow users to share large amounts of bandwidth, with any unused bandwidth going to people who can’t afford to pay (such as those faced with bank-breaking ISP charges for remote areas).

The takeaway

In the same way Airbnb and Uber enable users to earn from sharing access to their first and second most expensive assets, PKT enables users to share WiFi access (their bandwidth), being the most important part of their Maslow’s Hierarchy of Needs, for fun and profit. Just as Uber addresses the issue of only using a car around five per cent of the time (on average), potentially reducing the demand for cars by a factor of ten, PKT has the potential to produce value for the crypto ecosystem while having negligible environmental impact compared with BTC or any PoW alternative.

Alex Lightman is founder and CEO of Keemoji, developer of digital privacy keyboards, and KeePay, author of Brave New Unwired World, co-author of Augmented: Life in The Smart Lane, and recipient of the first Economist Reader’s Award for Innovation, beating Elon Musk in a global vote.


Twitter: @lxlightman


Disclosure: the author does not own Bitcoin or Helium and does own and develop software for PKT.