Chris Larsen, co-founder of Ripple, recently argued that Bitcoin code contributors should consider abandoning the cryptocurrency’s proof-of-work consensus mechanism in the future in favor of something more decentralized.
Larsen published a blog post earlier this week outlining the most serious PoW-related vulnerabilities, noting growing concern about Bitcoin’s carbon footprint.
According to the executive, Bitcoin (BTC) should consider a code change to more carbon-neutral validation methods such as proof-of-stake or federated consensus, or something else not yet developed.
I believe that Bitcoin’s dominance as the world’s leading cryptocurrency will be maintained only if this shift occurs.
“PoW is already unsustainable at its current energy and carbon footprint, with Bitcoin alone consuming an average of 132 TWh per year, which is equivalent to the annual energy consumption of approximately 12 million US homes,” Larsen noted.
“On average, Bitcoin consumes 132 TWh of energy per year, which is equivalent to the annual energy consumption of approximately 12 million US homes.”
As a result, he noted that altcoins that do not require proof-of-work to function — such as Ethereum, which is set to transition to proof-of-stake — account for 43% of all cryptocurrencies in terms of market capitalization, with many new coins eschewing proof-of-work in favor of alternative consensus mechanisms.
“The direction of the trend is crystal clear,” he stated.
Larsen asserts that the XRP ledger has been using federated consensus to secure its network and validate transactions for approximately nine years.
It has closed over 62 million ledgers without a single moment of downtime and consumes the energy equivalent of 50 US homes per year, he claims.
According to Larsen, some new and successful altcoins, such as Binance’s native token Binance Coin (BNB), use a variant of Proof-of-Stake (PoS).
Larsen’s remarks are all the more poignant because they come at a time when Bitcoin’s dominance on cryptocurrency markets has dwindled significantly.
For the first time since October 2020, the Bitcoin Dominance Index fell below 60% in March.
Meanwhile, as the altcoin market continues to grow, Bitcoin’s market share continues to erode, with the dominance index falling to 50.7 percent on Wednesday, the lowest level since November.
PoW proponents and proponents of PoS are at odds, with the latter claiming that the high cost of mining energy is the primary impediment to widespread adoption of PoW.
The Bitcoin and Monero communities frequently argue that proof-of-stake (PoS) cannot compete with the level of security and decentralization provided by PoW. This is not always the case.