Ripple co-founder thinks Bitcoin should move away from proof-of-work

by Gordon James

Chris Larsen, co-founder of Ripple, said Bitcoin (BTC) code developers should consider moving away from the cryptocurrency’s proof-of-work consensus mechanism.

In a blog post on Wednesday, Larsen outlined PoW’s key vulnerabilities, not to mention growing concerns about bitcoin’s carbon footprint. PoW-based currencies, such as Bitcoin, should consider moving the code to carbon-neutral validation methods, such as proof of authenticity or federated consensus, or something yet to be developed, he said.

I would argue that such a change is essential if bitcoin is to remain the dominant crypto currency in the world. PoW’s current energy demand and carbon footprint is already unsustainable, with bitcoin alone consuming an average of 132 TWh per year, the equivalent of about 12 million American homes, Larsen said.

The co-founder noted that non-PoW algorithms – including Ethereum’s imminent move to Probes – account for 43% of all cryptocurrencies in terms of market cap, with many new coins choosing to avoid PoW. Clearly, the trend is in that direction, he said.

Larsen mentioned that the XRP Ledger has been using Pooled Consensus for about nine years to secure its network and confirm transactions. It has closed more than 62 million ledgers without any downtime and consumes the energy equivalent of only 50 U.S. homes per year, he noted. According to Larsen, some successful new algorithms, such as Binance Coin (BNB) token from Binance, also use a version of PoS.

Larsen’s comments came amid a significant decline in bitcoin’s dominance in cryptocurrency markets. In March, bitcoin’s dominance index fell below 60% for the first time since October 2020. While the altcoins market has gained momentum, bitcoin has continued to lose market share, with its dominance index falling to 21. April fell to 50.7%.

There has long been a debate between PoW and PoS proponents, with the latter believing that the energy cost of mining is the biggest problem with PoW. The Bitcoin and Monero (XMR) communities – which are among the biggest proponents of PoW – often argue that PoS cannot achieve the level of security and decentralization that PoW provides.

Niklas Nicolaisen, founder of Swiss cryptocurrency broker Bitcoin Suisse, has predicted that bitcoin will switch to PoS once the Ethereum network proves the success of the algorithm.

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