In the first article of this three-part series on replacing paper documentation with the new-age block chain, we discussed the much lower cost and greater convenience of the paper ledger. But apart from ease of application and cost of paper, we also pointed to the seeming inability of the print and paper industry to promote and protect its interests.
Even in the environmental race, paper is the most eco-friendly solution. Nevertheless, it’s increasingly replaced by plastics in the physical world and by a combination of devices, clouds and block chains in the digital world. The print and paper industry seem to be unable to present their case as the best green communication and packaging solutions.
The print and paper industry is not able to take advantage of the fact that plastics are choking the land with litter and landfills, or that water bodies and marine life are on the backfoot because it is not being sorted, collected or recycled. It is unable to even present a strong case for introducing paper bags, paper straws and paper bottles as eco-friendly and scalable alternatives to plastic bags, plastic straws and plastic bottles. It is not as if the more than US$ 9 billion (Rs 63,000 crore) paper industry in India or the US$ 256 billion global paper enterprise is doing badly.
Profits and stocks of Indian paper companies are buoyant after almost two decades. However, little money is put into product research and even less is invested in the environmental promotion of paper products. Thus, even while plastic is scoring self-goals due to its rather frightening and omnipotent presence across the globe, paper is not coming forward to claim its rightful place as the alternative.
Blockchain is energy intensive
The comparison with digital ledger or blockchain technology is similar. The market cap of the blockchain companies have already crossed US$ 400 billion merely on the strength of unregulated and presumptive speculation. Not only is it an unstructured technology full of risk and uncertainties, it has a huge carbon footprint compared to the paper ledger. Nobody seems to be calculating the phenomenal rise of greenhouse gasses that would occur if the digital ledgers actually replaced even one-hundredth of the physical records used for transactions.
The original blockchain runs on an algorithm that consumes humongous energy. As much electricity that can power mid-sized nations like Argentina or Netherlands or meet a tenth of the electricity consumed by a large country like India is used. Almost 80% of the energy-intensive mining of cryptocurrencies that the blockchain technology currently produces is made in China. Kilometers of server banks operate in unison here to give computational power needed for quick round-the-clock mining of currencies like Bitcoin. In China, the energy cost is low, and it’s supply abundant. Besides, computer hardware is the lowest priced and server cost is a third of what is available at other global markets.
Proof of work gives the value-add to cryptocurrencies bitcoins. In mountainous Yunan, in remote Xingjuan and in Inner Mongolia, thousands of computers supported by kilometers of server banks solve complex algorithms and race with one another to validate the next block of transaction data and thereby claim the next Bitcoin. The soaring price of Bitcoin that climbed to US$ 19,000 last December incentivized more mining. If speculative profits remain as high as then, even more energy guzzling computational power will be pumped into the activity causing greenhouse gasses to double in less than a decade.
Michael Reed, the head of block chain technology at Intel, says that Bitcoin mining is unsustainable because it is extremely energy inefficient. But others say that making it costly and difficult to replicate keeps it away from the reach of hackers who would have to spend a fortune to duplicate. At the same time, extensive research is being conducted at MIT and Cornell University to create what is called a green blockchain without labor or energy-intensive mining that can automate all transactions using tamper-proof digital records.
However, the big question that will always rankle in the user’s mind is whether the humongous time, effort and energy worth investing to replace a product that is easy to use, cheap to produce and maintain. In the next and concluding part of our post, we will look at the maintenance and compliance cost of the block chain and compare it with the existing paper ledger it proposes to replace.