Ripple co-founder Chris Larsen has said that it may be time for Bitcoin to move away from its proof-of-work (PoW) concept, which has dominated the blockchain since the currency was created in 2009.
In a blog post published last night, Larsen outlined his arguments as to why the transition was necessary, citing environmental concerns among others.
“Addressing the climate crisis is a priority for every segment of society and the economy — including new emerging technologies such as cryptocurrencies. That doesn’t just mean moving to renewable sources of energy, but also reducing unnecessary energy use”, he said.
Earlier this month we briefly discussed whether Bitcoin poses a threat to the planet to the extent that some parties stipulate. Larsen believes that it does, as the PoW concept is a “huge and growing source of CO2 emissions”.
He similarly argued that, as cryptocurrencies are moving into the mainstream, people will end up having access to “more affordable financial services”. Crypto, in his opinion, was created to be accessible and inclusive and create an efficient financial system for all.
Therefore, cryptocurrencies that use a PoW consensus should now consider adopting a proof-of-stakes concept (PoS) or federated consensus (the idea behind the XRP Ledger itself).
Larsen pointed out that the majority of currencies that launch on the market today try to avoid the PoW concept and pick PoS for the most part. He didn't dismiss PoW though, arguing that the model was “brilliantly designed”, but was unfortunately becoming outdated.
Larsen explained that as institutional investors are now driving stronger forays into Bitcoin investment, they would eventually face pressure from their clients and consumers who would want to make sure that their investments are more environmentally-friendly.