Ripple Labs co-founder and executive chairman Chris Larsen is confident that he can convince Bitcoin (BTC) miners to switch from the Proof of Work (PoW) mining method, associated with high energy use, to Ripple’s Proof of Stake (PoS) method.
Ethereum, another PoW network in the past, decided to make the ambitious shift towards a PoS system and it seems to have paid off, although gas prices were an issue for a while.
To clarify, Ethereum (ETH) is still in the process of completing its transition, but Vitalik Buterin, the world’s youngest crypto billionaire and ETH founder and creator, is adamant that the long-term implications for ETH would outweigh any drawback from the temporarily choppy transition (including the spike in gas fees).
Larsen argued the case for the climate and specifically that BTC’s code needs to be edited to a low-energy consensus algorithm like those used by most new currencies.
“For example, while Bitcoin uses the energy of approximately 12 million US homes per year, other methods could drive that to fewer than 100 US homes”, he said.
Larsen is already thinking about how a PoS concept may work for BTC. He suggested the answer may be to “fairly distribute” 900 BTC per day.
Understandably, this idea has been met with some criticism, but Larsen says that existing miners would simply have rights to future BTC rewards without ever having to expend any energy (or minimum energy, rather).
Miners would get an additional economic benefit, argues Larsen, but the truth is that a lot of interest is locked up in BTC right now.
While the BTC price dropped to below $50,000, a major shift in the algorithm will surely come with unpredictable consequences for the pricing model, because of the currency’s volatility.
Larsen does not address how a PoS shift would influence BTC’s value and what investors, and consumers would do.