Disrupting Blockchain (Part 2)

Dr. ir Johannes Drooghaag
6 min readMay 17, 2020


Even when blockchain and cryptocurrencies are a thing of this decade and their real breakthrough debut still hasn’t reached the first lustrum, the technology which enables blockchain platforms is decades old. To be more precise, the concepts and maiden implementations originate from the 70’s and 80’s. Public key encryption, cryptographic hashes, Merkle trees, peer to peer distribution, and yes even the famous distributed ledger technology and consensus protocols find their roots between 30 and 40 years ago. For example as references and proof-of-concept in the section “Challenges and opportunities to create digitized traceable transparency in production and supply chains” of my dissertation in 1987.

What is rather unfortunate, is that additional and significantly improved concepts, like for example selective peer-to-peer distribution and asynchronous Merkle trees, which are also decades old and would have eliminated several major weaknesses of today’s blockchain and cryptocurrency platforms, didn’t make it to the current implementations (yet)!

Taking components of existing technology and reassemble them into a new application is by itself a form of low-risk disruption, and as such not a bad idea. Given the weaknesses and restrictions of blockchain technology, it is high time to add true innovation to the mix. When we however review which devastating impact today’s blockchain and especially cryptocurrencies have on our battered environment, we can only conclude that these innovations are long overdue!

Before blockchain enabled technology can leave the stage of the small-size implementations it is in today, and become a reliable mainstream and widespread technology, the technology which determines the speed of transactions and its ability to process high volumes of transactions need to significantly improve. Drastically improve, as a comparison of payment platforms clearly demonstrates for example. In this context it is important to understand that payment platforms like VISA can scale up rapidly when needed and on the other hand, Bitcoin already reached its technology defined physical limitations.

There is good news on the horizon. New platforms and major players which are entering the market are stepping away from the first blockchain concepts and actively design solutions which can do significantly more than what we see today and with significantly less resources. A very promising example is Credits.com, definitely worth checking to see what blockchain can actually achieve in terms of volume and speed.

It should be well known by now which negative impact the mining of proof-of-work based blockchain platforms and cryptocurrencies have due to their energy consumption. Not just for the systems themselves, also for the network infrastructure and let us not forget the electricity consumption to cool the systems which are generating heat.

In short, these combined have done nothing less than adding a countries the size of for example The Netherlands, Austria, etc. to the global electricity consumption for the sake of profit, in a day and age where we all and without exception should focus on reducing carbon exhaust to save our planet from total destruction. This is unsustainable and should have been addressed long before it came to this unacceptable level of exploitation of the environment!

There is more than the extreme energy consumption. To be able to make a profit on the mining of new coins, hundreds of thousands of not millions of powerful systems have been build and installed. Systems and infrastructure are build using rare metals. Most systems and their components include aluminum, antimony, arsenic, barium, beryllium, cadmium, chromium, cobalt, copper, gallium, gold, iron, lead, manganese, mercury, palladium, platinum, selenium, silver, and zinc. Not only are most of these metals rare, the mining process itself is causing serious damage to the environment.

And this is where it becomes really nasty, metals like cobalt are mined using child labor!

At this point it is important to understand that proof-of-work itself is not the real problem. The problem is the proof-of-work based consensus protocols in which incentives on brute-forcing invite the block/coin mining farms to cause significant damages to our environment. There are better technical alternatives available since several decades which can achieve the same level of encryption and security, without drastically decreasing the lifespan of our planet. These would however offer significantly lower incentives and therefor attract less miners. Once again, it all evolves around the profitability without reflection of the impact.

Besides the energy hungry consensus protocols based on proof-of-work and some of the other variations, there is the impact of peer-to-peer based distributed ledger which would enforce a large scale blockchain implementation to distribute the entire strain of data in the blockchain over all active nodes in the network, including the related hashes to previous data.

Among the top priorities of (almost) every government is its ability to collect taxes, which is reflected in a significant part of the legislation. At a global and local level, there is also strict regulation on Anti Money Laundering (AML) and Terror Financing, which for example place strict responsibility and even liability on executing processes known as Know Your Customer (KYC) and Know Your Business (KYB). The highly praised anonymity of blockchain and cryptocurrencies are a preprogrammed conflict with these requirements, and it will most likely not take long until regulations will kick in with restrictions.

The ultimate goal of blockchain is as Bill Tai, a profound advocate of everything blockchain and cryptocurrency, puts it: “So we are right now at that point where assets because of the blockchain can be connected to a gigantic network so every single asset in the hands of every single person can broadcast itself to find its buyer or seller.”

Before this can become a reality, legislation will need to be adapted to support, recognize and even accept such environment. And that will take many years, as we can see for example with the timeline of GDPR, which in its essence is significantly less complicated than the legislative adaption which will be required to create blockchain AML, KYC, KYB, TF and asset registration compliancy.

Blockchain will not eliminate fraud or cure diseases, and cryptocurrencies in its current form will only exist until governments have found ways to control it like fiat currencies.

What will come soon is a disrupted blockchain, disrupted by blockchain itself. High volumes enabled by new and efficient consensus protocols. Drastically reduced energy consumption by improved data transmission protocols and an overdue farewell to proof-of-work. Increased security and data validation algorithms and protocols which no longer depend solely on the size of the network. Significantly improved scalability through consolidated, broadcasted and clustered ledgers.

With big players entering the market, both as solution provider and as integrator, the share of private blockchain versus public blockchain will tilt, and private blockchain platforms will form the majority within the next 5 years. These major players in combination with the growing amount of private blockchain platforms will also lead to reducing share of open source in the blockchain sphere.

Integration of blockchain and systems will finally become a priority, and blockchain technology will be surrounded by API’s and data mapping solutions. Bluntly said, blockchain will go a similar path as SQL did. Once a true innovation with enormous emphasis on the potential, followed by being a must-know tech, and now “just a tool” which is gradually being replaced by better, faster and more efficient tools and methods.

Bitcoin et al? The mix of hard to trace and unsustainable energy consumption will eventually lead to countries starting to prohibit mining or even usage as payment and asset/wealth storage. New and better platforms will cause declining interest in this Crypto 1.0 currencies. As advocate of SDG’s, that day can’t come fast enough for me!



Dr. ir Johannes Drooghaag

Dad, consultant, coach, speaker, author. Mainly Cyber Security, leadership, responsible tech and organizational change. https://johannesdrooghaag.com