Ethereum: Navigating the Blockchain’s Sustainability Versus Profit Dilemma

by Ernesto Dal Bó and Guo Xu


The popularity of Blockchain—and its application to cryptocurrencies in particular—has soared in recent years. Blockchain platforms are completely decentralized, relying on networks of participants to securely validate transactions without a central authority. Existing cryptocurrencies use a validation process called Proof of Work (PoW), a form of cryptography that requires a network of “miners” to commit their own computing power by solving complex cryptographic puzzles. Miners who create and publish new blocks are rewarded. But there is now a growing concern that the amount of electricity required to run PoW networks has become unsustainable: the Bitcoin network, for instance, requires the same amount of electricity as a small country. Vitalik Buterin, the co-founder of Ethereum, has proposed a new validation model called Proof-of-Stake (PoS). This case explores the challenges associated with incentivizing participants to transition in a more sustainable, but unproven new model.

Learning Objectives





Details

Pub Date: November 1, 2020

Discipline: Ethics

Subjects: Ethics, Cryptocurrency, Blockchain, Financial technology, Energy, Environmental sustainability, Strategy, Stakeholders

Product #: B5964-PDF-ENG

Industry: Financial services, Internet services

Geography: United States, Switzerland

Length: 3 page(s)


Berkeley Haas Case Series
Berkeley Haas Case Series The Berkeley Haas Case Series is a collection of business case studies written by faculty members at the Haas School of Business. Cases are conceived, developed, written, and published throughout the year, on subjects ranging from entrepreneurship and strategy to finance and marketing. Each case includes a teaching note for use in the classroom.

Recommended

Berkeley Haas Case Series

A new collection of business case studies from Berkeley Haas

The aim of the Berkeley Haas Case Series is to incite business innovation by clarifying disruptive trends and questioning the status quo.

Learn more
Follow Us