Ripple co-founder thinks Bitcoin should move away from proof-of-work
Bitcoin needs to move away from the proof-of-work consensus mechanism to remain the world’s dominant cryptocurrency, Ripple’s Chris Larsen said.
Bitcoin (BTC) code contributors need to consider a move away from the cryptocurrency’s proof-of-work consensus mechanism, Ripple co-founder Chris Larsen argued.
In a Wednesday blog post, Larsen outlined major PoW-related vulnerabilities, noting growing concerns over Bitcoin’s carbon footprint. According to the executive, PoW-based coins like Bitcoin should consider a code change to carbon-neutral validation methods like proof-of-stake or federated consensus, or something yet to be developed.
“I would argue that such a change is critically important for Bitcoin to remain the world’s dominant cryptocurrency. PoW’s current energy demands and carbon footprint are already unsustainably high, with Bitcoin alone consuming an average of 132 TWh a year — equivalent to roughly 12 million U.S. homes,” Larsen noted.
The co-founder pointed out that non-PoW altcoins — including Ethereum’s anticipated switch to proof-of-stake — make up 43% of all cryptocurrencies by market capitalization, with many new coins choosing to avoid PoW. “It’s clear which way the trend is moving,” he stated.
Larsen mentioned that the XRP ledger has been using federated consensus to secure its network and validate transactions for about nine years. “It’s closed 62+ million ledgers without downtime, uses the energy equivalent of just 50 U.S. homes per year,” he noted. Some new successful altcoins like Binance’s native token Binance Coin (BNB) also operate a version of PoS, Larsen said.
Larsen’s remarks come amid a significant drop in Bitcoin’s dominance on cryptocurrency markets. In March, the Bitcoin Dominance Index dropped below 60% for the first time since October 2020. As the altcoin market gains momentum, Bitcoin continued to lose its share of the market, with the dominance index falling to 50.7% on April 21.
There has been a long-running debate between proponents of PoW and PoS, with PoS advocates seeing mining energy costs as the biggest problem for PoW. The Bitcoin and Monero (XMR) community — some of the biggest PoW proponents — often argue that PoS cannot reach the level of security and decentralization provided by PoW.
Niklas Nikolajsen, the founder of Swiss crypto broker Bitcoin Suisse, predicted that Bitcoin will shift to PoS once the Ethereum network proves the algorithm’s success.
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Author: Helen Partz