Bitcoin Must Move Away From Its Core Proof-Of-Work Technology To Remain A Dominant Cryptocurrency, Says Ripple Co-Founder | Currency News | Financial and business news
- The Ripple co-founder believes bitcoin developers should be concerned about its proof-of-work technology.
- He suggested moving to a more carbon neutral method such as proof of stake or federated consensus.
- “Such a change is of crucial importance for bitcoin to remain the dominant cryptocurrency in the world.”
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The conversation around Bitcoin’s environmental threat seems to be intensifying as more people talk about its impact on the climate.
Chris Larsen, co-founder of Ripple, has suggested Bitcoin is expected to ditch its Proof of Work (PoW) core technology used in the mining process. He said he should instead use other methods such as proof of stake (PoS), federated consensus or some other technology that has yet to be developed.
PoW is a blockchain technology algorithm used to confirm bitcoin transactions and produce new blocks on the chain. It is a power intensive process, and even a few transactions on the network can have as much carbon footprint like driving a gasoline sedan for 1,000 kilometers.
Bitcoin running on the PoW algorithm led it to use an average of 113.8 terawatts per hour, roughly the equivalent of the energy consumed by 12 million American homes, and release about 63 million tonnes of CO2 per year, Larsen said in a blog post this week.
The PoS network, on which Ethereum 2.0 runs, is more energy efficient because it uses less computing power to secure the blockchain. Larsen believes Binance Coin and Ethereum, which both run on PoS, should be commended for their sustainability efforts.
“I know this is a bold proposition, but it deserves serious discussion given what the world looks like today (compared to Bitcoin’s launch in 2009),” Larsen said. “While there is heated debate about PoW versus other validation methods, we now have nearly a decade of data to examine.”
Ripple’s XRP has been using federated consensus, which allows multiple entities to support the network, for nine years. Larsen said this indicates a carbon neutral grid, which equates to the energy consumption of just 50 American homes per year.
“Today, non-PoW-based coins (including the planned change in Ethereum) make up 43% of all cryptocurrencies by market cap, and the majority of new cryptocurrencies introduced today choose to avoid PoW. It’s clear in which direction the trend is moving. “
“I would say that such a change is of crucial importance for Bitcoin to remain the dominant cryptocurrency in the world.”
Larsen has warned that while bitcoin is gaining in importance in institutions and retail, many of its supporters are turning a blind eye or trying to green their problem.
He also said Tesla’s $ 1.5 billion investment in bitcoin went against its goal as an electric vehicle maker. This purchase wiped out the automaker’s entire annual CO2 savings, he said.
“As businesses begin to understand this troubling connection, they would rightly have concerns to invest. Bitcoin advocates should see it as a significant threat.”