After the fourth Bitcoin halving occurred last week, the mining rewards have been cut in half, resulting in a significant decrease in miner earnings. Nevertheless, PayPal has put forth an enticing new plan to encourage Bitcoin miners who utilize eco-friendly energy sources.
The objective is to make it financially beneficial for Bitcoin miners to adopt sustainable practices through this innovative rewards system, which PayPal’s Blockchain Research Group, in partnership with Energy Web and DMG Blockchain Solutions, has proposed. These “cryptoeconomic incentives” aim to motivate miners to utilize renewable energy sources.
PayPal thinks that these experimental incentives could lead to more conversation and advancements regarding Bitcoin. The plan suggests giving “green keys” to “eco-friendly miners,” all connected to their public keys. Later, Bitcoin transactions would give preference to these miners, resulting in lower fees and an additional BTC reward locked up in a multisig wallet. Only the eco-friendly miners would have access to this wallet.
“Green miners, who are the only ones qualified for an extra “locked” BTC reward when mining certain transactions, will be encouraged to do so due to this incentive.” In other words, eco-friendly miners, who derive profit from sustainable energy sources, stand to gain additional BTC rewards.
Leveraging Energy Web’s “Green Proofs for Bitcoin” Platform
According to PayPal’s proposed plan, the solution will utilize Energy Web’s “Green Proofs for Bitcoin” system to authenticate miners based on their environmental footprint and use of renewable energy. Miners who meet these criteria can join this platform by providing their “green keys,” enabling them to take part in incentive programs.
PayPal’s Research and Development team, PayPal BRG, collaborated with Bitcoin miner, DMG Blockchain Solutions Inc., to trial a new method. During this experiment, they transmitted multiple low-cost transactions to evaluate their efficiency under different levels of blockchain network activity. The results indicated that high transaction volumes could result in extended confirmation times or even rejected transactions. This situation would increase the chance of eco-friendly miners processing these transactions instead.
Another approach here would be to involve private channels such as smart contracts or Lightning Network. However, the trade-off in this case is a more complex implementation. PayPal BRG concluded by stating:
“This proposed solution strives for a significant level of decentralization, simplicity in execution, and trust autonomy as it disperses rewards.”
Recently, PayPal has taken significant steps in the cryptocurrency world. They’ve introduced their own stablecoin, called PYUSD, and made adjustments to their Non-Fungible Token (NFT) policy.
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2024-04-23 10:45