Co-founder of Ripple believes Bitcoin needs to part from its proof-of-work consensus mechanism.
Bitcoin, the first and most popular cryptocurrency must switch to another consensus mechanism in order to remain on top of the list, according to a Wednesday blog post written by Larsen.
“Cryptocurrencies that use PoW should consider a code change to another validation method such as Proof-of-Stake (PoS) or Federated Consensus (or something yet to be developed).”
The post titled ‘The Cryptocurrency Industry Needs to Reconsider Proof-of-Work’ talked about several issues that PoW brings to the table. One major reason this mechanism should be ditched is its energy consumption and CO2 emissions.
That is why Larsen advises digital currencies based on this kind of consensus, like Bitcoin, to shift to a less environmentally harmful one. Proof-of-stake might be a good option, or something not even built yet.
“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.”Chris Larsen, co-founder of Ripple
According to Chris Larsen, 43% of the crypto market consists of digital currencies not based on a PoW mechanism.
“We should see PoW for what it is — a brilliantly designed technology that is becoming outdated in today’s world. They [PoW networks] need to …. embrace low energy/low carbon alternatives to secure their ledgers.”Chris Larsen, co-founder of Ripple
What is a proof-of-work consensus mechanism?
Proof of work is a protocol needed to execute a complicated mathematical equation called mining. This is a process required to create a new group of transactions that will be added to the blockchain.
What is a proof-of-stake consensus mechanism?
This protocol turns miners into validators and makes the whole process of mining virtual. Unlike the proof-of-work protocol that rewards miners, the block creator is picked through several combinations of a random selection of wealth and age. Since the mining process is virtual, there is a great amount of energy and money saved.
(Read more about them here)
As blockchain technology evolves, so do consensus algorithms. There is plenty of work ahead, but cryptocurrency enthusiasts continually try to update the technology and make it more secure.