A research report published by Michel Khazzaka, an IT engineer, cryptographer and consultant, calculates that bitcoin payments are "millions of times more efficient" than the old financial system.In addition, the banking sector "uses 56 times more energy than Bitcoin."
The report compiles nearly 4 years of research and proposes a new calculation to estimate energy consumption evidence of Bitcoin's work.In an interview, Khazzaka told Cointelegraph:
"Bitcoin Lightning and Bitcoin in general are really great and very effective technology solutions that deserve to be adopted on a large scale.This invention is excellent enough, effective enough and powerful enough to be applied en masse. "
Khazzaka, who founded payments consultancy Valuechain in late 2021, proposed an alternative to the energy estimates provided by Cambridge's Bitcoin Power Consumption Index (CBECI). The index estimates that Bitcoin consumes about 122 TW/H per year.
Taking into account the average lifespan of Bitcoin miners as well as the speed at which new IT materials are created, Khazzaka argues that Bitcoin consumes 88.95 TWh per year, significantly less than Cambridge's estimate.
A payments expert who wrote his thesis on cryptocurrencies in 2003 and discovered Bitcoin in 2011, Khazzaka also put the banking sector under the microscope to compare the effectiveness of the two monetary systems.Khazzaka told Cointelegraph that he "really underestimates every aspect of the banking sector," and contrary to critics, his report "favors the banking system."
However, taking into account the creation of money, the transportation of money, the energy consumption of the physical banking infrastructure, etc., he achieved the figure of 4,981 TWh.Rounded up, 5,000 TWh is consumed by the "classic payments" sector each year.As a result, banks use 56 times more energy than Bitcoin.
The report reviewing transaction efficiency reveals that currently, "at the current block size and if the blocks are filled with a maximum capacity of ηmax = 5.7 × better energy efficiency than the classic system." However, that's not to mention the Lightning Network.In the interview, Khazzaka explained:
"Lightning will allow the bitcoin protocol to make more transactions without consuming more energy. And this is a miracle. "
The report concludes that the combination of Bitcoin and the Lightning Network allows Bitcoin to become "194 million" more energy efficient than the classic payment system.
For Khazzaka, the report points out that "the banking and payments industry needs to adopt blockchain and possibly even Bitcoin."While Khazzaka's conclusions may come as a surprise to cypherpunks and anarchist financiers who support the cryptocurrency space, Khazzaka believes that Bitcoin could actually benefit the bank:
"If they are brave enough, blockchain technology will improve their efficiency and scalability."
While Bitcoin's energy use is frequently criticized, the investigation into the banking sector will be welcome news for many.
