New IBM Research on Bitcoin Mining’s Proof of Work Shows How to Improve Blockchain’s Energy Performance

IBM Research Believes That They Have a Way to Use Various Blockchain Architectures for Better Performance

Blockchain technology involves many different mechanisms and protocols that help it to function be more secure. One such mechanism, Proof-Of-Work (PoW), is used to secure blockchain and cryptocurrency blockchains, but it hasn’t held the best reputation for their excessive energy. To mine and validate transactions, computers that use the PoW protocol are required to solve math problems, but the large number of computers needed can take up massive energy.

IBM Research, which is the research and development division of IBM, has had their scientists working on a solution to this problem. According to their research, they believe that they’ve discovered a way to modify and combine the various blockchain protocols, including PoW, that will be more efficient for energy usage. It will also support the need for improved scalability and security on the blockchain.

Their new technological advance was announced on Wednesday, and their discovery of this improvement was actually due to using PoW with the Internet of Things (IoT). Instead of using all of these computers to then add to a separate blockchain and perform all the processing on the ledger, it would run blockchain nodes on the devices of the network.

Unfortunately, there is still a kink in their application of this plan. PoW mining hardware for validating cryptocurrency and transactions, like ASICs and GPUs, all have a specific computing power and the same energy source. However, IoT devices are varied in both their resources and the actual power, ranging from small temperature gauges that fit in a pocket to cars that have 4G or Wi-Fi connectivity. Due to this extreme difference, there is a chance that at least some of the IoT devices cannot handle the complexity of the problems that hardware has to solve.

This whole plan is divided into multiple phases. The first phase is described in a paper called “Hybrid-IoT: Hybrid Blockchain Architecture for Internet of Things – PoW Sub-blockchains.” This paper is published on the Cornell University Library website, where they start by explaining the evolution that IoT has gone through over the years. The phase is summarized by a later publication called “A Blockchain Architecture for the Internet of Things.

The second article states,

“The first phase of development for an end-to-end, decentralized framework to autonomously manage the orchestration of geographically distributed IoT networks. It achieves this through the combination of analytics, well-established blockchain community-based open source modules and a novel code base written by the team. In essence, we adapted the Bitcoin Proof of Work- PoW consensus protocol and coded analytics that optimally cluster the IoT devices into separate blockchains, or sub-blockchains.”

According to IBM Research, there is a chance that all nodes do not have to participate in mining. It is mostly used as a way to keep miners honest. As IBM works on a Testnet for their theory, they’ve split up the nodes into groups, ranging from 250 to 1,000, letting the new algorithm determine what entity needs to mine, based on the power of the nodes and security.

The technical lead at the IBM Research Smarter Cities Technology Centre in Dublin, Dr. Emanuele Ragnoli, spoke with CoinDesk about this adjustment. He said,

“At the moment we look at blockchains like totally flat peer-to-peer systems, in which all the nodes have to do the same things, compete against each other to get that mining reward, for instance. But you don't need everybody to do the same type of job.”

Ragnoli’s hope is that they can establish a “layered ecosystem” that allows miners to perform different tasks, as assigned by the algorithm.

“Some of the nodes do the full PoW, like you have in bitcoin. They do that because of the analytics behind the blockchain, which can actually see whether a device can do that kind of job, and place that device accordingly into a cluster of other devices that will be assigned a certain type of consensus,” he said.

From there, the “sub-blockchain” is connected to the network with technology like that of Cosmos and Polkadot. This patchwork system is being called “Hybrid IoT Blockchain.” To make it possible, their article on this topic says,

“We identify five relevant dimensions that an optimal blockchain PoW implementation for IoT should be subject to: scalability, security, decentralization, efficiency as observed metrics, and network bandwidth as a controlled parameter.”

The paper continues reviewing the necessary attributes of each of those dimensions to clarify why they are necessary and what is needed. For instance, regarding efficiency when applied to IoT, the definition is “an optimal utilization of hardware resources and energy.”

Based on this classification, in order to achieve that, They add,

“The IoT devices on the blockchain should optimally utilize resources and energy to maintain and progress the blockchain. Among others, an obstacle to that is the issue of forks and stale blocks in PoW blockchains. Specifically, stale blocks do not contribute to the security of the blockchain and transactions in stale blocks are considered as unprocessed by the network, requiring wasted effort to generate them. Hence, we define our metrics for efficiency as the stale block generation ratio and we establish an upper bound for performance to be ≈1%.”

Ultimately, IBM Research is part of a bigger picture and effort to develop a “machine-to-machine economy, in which devices would have their own blockchain wallets and trade with each other,” according to CoinDesk. Still, Ragnoli remains realistic about the IoT solution for blockchain, saying that the world is a “huge set of leaps” away.

Examining how this ecosystem would work in an industrial setting, he said,

“Nowadays in industry 4.0, or manufacturing, you have many different factories that collaborate with each other to create a single product. So, you have sensors, machines, even algorithms and analytics operating in the different factories, and inside the same factory, that the need to interoperate with each other.”

By combining the factory devices with the hybrid model, IBM has discovered that this seems to be the best way to handle security. Ragnoli noted,

“We are taking common consensus algorithms like PoW, the vision of Cosmos, etc., and we are altering ways of putting them together. The way we are designing this is like small Lego blocks, driven by the AI layer.”

When discussing how algorithms are reshaping blockchain without the risk of security breaches, he added,

“Why not augment the blockchain with analytics and AI algorithms that can actually shape the blockchain in a way that it helps it to overcome some of the limitations that are out there now?”

However, how could the performance of IoT devices change how cryptocurrency devices work? Saying PoW needs to have a better method of organization is barely lip service, and a real solution is necessary.

According to Ragnoli, this blockchain could be altered in a way that trading can be performed with different currencies under the same protocols. However, he mentioned, “I’ve not gone as deep as actually altering the cryptographic consensus within – although that is actually a very interesting direction to explore.”

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