Ripple Co-Founder Chris Larsen Wants Bitcoin to Switch to Green Consensus Algorithm
Bitcoin mining’s biggest critics have always listed energy consumption as the bane of mining digital assets and Ripple co-founder Chris Larsen thinks he might have a solution to the problem in his most recent blog. Larsen, who’s also the executive chairman of Ripple Labs proposes Bitcoin miners move away from the existing, energy-intensive proof-of-work (PoW) algorithm to the more energy-efficient proof-of-stake (PoS) protocol. He added that these miners should view his plan as “a net positive for their longevity” while also adding his take on how the switch could benefit mining firms.
Larsen notes that the only way to transition to a low-energy consensus can be achieved through a change in the network’s code — a change that would significantly disrupt the nature of the Bitcoin network.
While this is early stages (and not perfect by any means), I believe if miners continued to receive BTC incentives WITH a code change, this could bring them on board. Let’s discuss. 2/2
— Chris Larsen (@chrislarsensf) December 9, 2021
Proof-of-work is the consensus algorithm that secures Bitcoin transactions on the blockchain. While the Bitcoin network is the most secure and reliable, the amount of energy Bitcoin mining requires causes endless debate in the crypto space.
“The least disruptive proposal would simply take a snapshot of the current hash rate of existing miners and then reward miners on a pro-rata hash power basis until 2140,” Larsen said in his Medium post. “Existing miners would simply have the rights to future Bitcoin rewards without having to make additional investments in mining platforms.”
According to Larsen, his proposal is fair because it rewards miners for their efforts to secure the Bitcoin network over the years with less operating costs. “Under such a proposal, miners would gain additional economic benefit — gaining the same revenue with substantially less operating costs,” he concluded. For better network security, Larsen writes that the proposal can be modified to include a staking mechanism.
The billionaire also suggested that the network could tokenise future rewards for miners. He said that such an upgrade would be lucrative to miners, especially as the whole network transitions to full green finance technology.
There is a very low chance that this proposal could get implemented since Bitcoin mining firms that are now planning to increase their share of the hash rate would miss out on important revenue. A host of US mining firms are already looking into the use of green energy sources, for who a move to PoS would make little sense. There’s also an inherent problem with the proof-of-stake model and that is its impact on the security of the blockchain, a problem that has no solution to unless there’s a ready modification to Larsen’s suggested proposal.
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