Ripple Co-Founder Says Bitcoin Should Move Away From ‘Proof-of-Work’ Consensus

Chris Larsen, Co-Founder and Executive Chairman of Ripple, explained why he personally believes that the crypto industry should be not just “moving to renewable sources of energy”, but also “reducing unnecessary energy use.”

In a post published on Earth Day (April 22) on his personal Medium blog, Larsen said that although “many newer cryptocurrencies are already low consumers of energy or even carbon-neutral,” some older cryptocurrencies, such as Bitcoin, “use a core technology called Proof-of-Work (PoW) to validate transactions, which is not only a huge and growing source of CO2 emissions but also uses massive amounts of energy, both from fossil fuels and ‘green’ sources.”

He went on to say that while it is “encouraging to see many crypto market participants (including miners) commit to using 100% renewable energy, and decarbonizing their individual emissions,” this is “only part of the solution.”

Here is Larsen’s “bold” proposal:

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), which have also proven effective in securing their stored value while using a tiny fraction of the energy.

He then gave three examples of cryptoassets that use more energy-efficient consensus mechanisms:

The XRP Ledger has been using Federated Consensus to validate transactions and secure its public ledger for almost nine years. It’s closed 62+ million ledgers without downtime, uses the energy equivalent of just 50 U.S. homes per year, and is already carbon neutral. While fairly new, Binance Coin (BNB) operates a version of PoS that secures a market cap of over $80 billion, and the Ethereum community has begun the process of switching to PoS. They should be commended for their sustainability efforts. While PoS and Federated Consensus are slightly newer than PoW, these technologies are battle-tested and proven to be decentralized.

The Ripple Co-Founder then added that “such a change is critically important for Bitcoin to remain the world’s dominant cryptocurrency.” Although Bitcoin is not the only cryptocurrency using PoW, it “accounts for 98% of all coins’ hashrate that use ASICs (specialized hardware used to mine bitcoin).”

Larsen thinks that U.S. institutional investors, which are “driving the crypto boom of 2020/21,” will “undoubtedly face pressure (from consumers and regulators alike) to reduce or divest their PoW crypto holdings — including bitcoin,” which means that the Bitcoin community “should see this as a significant risk and work to address it.” Here, he is talking about “people who build and contribute to Bitcoin’s code — the key miners, exchanges, and core developers.”

Source: https://www.cryptoglobe.com/latest/2021/04/ripple-co-founder-says-bitcoin-should-move-away-from-proof-of-work-consensus/

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