Contributors of Bitcoin (BTC) code should consider moving away from the cryptocurrency’s proof-of-work consensus mechanism, argued Ripple co-founder Chris Larsen.
In a blog post on Wednesday, Larsen outlined the major vulnerabilities associated with PoW, without growing concerns about Bitcoin’s carbon footprint. According to the executive, PoW-based coins such as Bitcoin should consider a code change to carbon neutral validation methods, such as proof-of-stake or federated consensus, or something yet to be developed.
“I would say such a change is critical for Bitcoin to remain the dominant cryptocurrency in the world. The current energy needs of PoW and its carbon footprint are already unsustainably high as Bitcoin alone consumes an average of 132 TWh per year, which equates to about 12 million US homes, ”noted Larsen.
The co-founder pointed out that non-PoW altcoins – including the expected move from Ethereum to proof-of-stake – make up 43% of all cryptocurrencies by market cap, with many new coins choosing to avoid PoW. “It’s clear which direction the trend is moving in,” he said.
Larsen said the XRP ledger has been using federated consensus to secure its network and validate transactions for about nine years. “It has closed 62+ million ledgers with no downtime, consuming the energy equivalent of just 50 US homes per year,” he noted. Some new successful altcoins like Binance’s native token Binance Coin (BNB) also have a version of PoS, Larsen said.
Larsen’s comments come amid a significant decline in Bitcoin’s dominance in cryptocurrency markets. In March, the Bitcoin Dominance Index fell below 60% for the first time since October 2020. As the altcoin market gained momentum, Bitcoin continued to lose its market share, with the dominance index dropping to 50.7% on April 21.
There has been a long-running debate between proponents of PoW and PoS, with PoS advocating seeing mining energy costs as the biggest problem for PoW. The Bitcoin and Monero (XMR) community – some of the biggest proponents of PoW – often argue that PoS cannot achieve the level of security and decentralization offered by PoW.
Niklas Nikolajsen, the founder of Swiss crypto broker Bitcoin Suisse, predicted that Bitcoin will switch to PoS as soon as the Ethereum network proves the algorithm’s success.