Can Bitcoin Hard Fork To Proof-of-Stake Consensus? What It Would Mean for Apex Crypto – Bitcoin (BTC/USD), Bitcoin Cash (BCH/USD)
The pioneering cryptocurrency Bitcoin BTC/USDwhich still dominates the market today, has encountered several difficulties along the way, with the most related to proof-of-work (PoW) mining consensus and the subsequent environmental impact.
One of the most talked about problems last year was the high energy consumption of the Bitcoin network, with the likes of Tesla Inc TSLA CEO Elon Musk encourages the idea that Bitcoin in its current form is harmful to the environment.
However, mining companies have been researching the use of renewable energy for some time, and the latest reports indicate that 58% of the energy used by the Bitcoin network originates from renewable sources.
By 2022, the discussion appears to have shifted from the use of sustainable energy to a total overhaul of the mining consensus, with a powerful lobby and proof-of-stake (PoS) advocates calling for a change in Bitcoin code.
The transition of Ethereum ETH/USD from proof-of-work to proof-of-stake, which took place last month, is also fueling calls for the change.
With PoW as the original crypto mining consensus, it was adopted by a number of pioneering crypto projects and popularized by Bitcoin, while PoS was introduced with the release of Peercoin in 2013, and although not favored, its capacity to scale and low . its energy consumption made it a popular option for new cryptocurrency ventures.
The hype surrounding Ethereum’s transition to PoS has revived the conversation surrounding Bitcoin’s hard fork against PoS consensus.
In this article, we list a few reasons why Bitcoin is highly unlikely to move to PoS.
The immutability of Bitcoin
Immutability refers to the fact that current data on a blockchain cannot be changed or tampered with and that these data records are irreversible.
Bitcoin does this by using distributed ledger technology, along with time-stamping on the blockchain, to simultaneously maintain identical data on multiple computers around the world.
By hashing the transactions into a continuous chain of hash-based proof-of-work, the network timestamps transactions, creating a record that cannot be changed without repeating the proof-of-work.
Even if “redoing proof-of-work” required continued mining (maintaining a PoW system), there would still be difficulties due to more than 13 years of data on a 24/7 operating blockchain.
It would be very difficult to transfer this huge amount of data from the existing chain to a new one using PoS.
In contrast, Ethereum’s merger was only completed last month after years of discussion between Ethereum developers and other stakeholders.
While Bitcoin started in 2009, Ethereum was launched in 2015.
It will be far more difficult to deploy a significant modification to an entire system that was once intended to be immutable.
Even if it is technically possible to switch from PoW to PoS, it would be very challenging and impossible, not to mention extremely unpleasant for the mining community.
The cost of Bitcoin mining equipment will decrease dramatically
Miners must use application-specific integrated circuits (ASIC) miners, highly specialized equipment, to do complicated calculations and to accommodate the extremely high hash rates required to mine the cryptocurrency, to mint Bitcoin.
There are few options for Bitcoin miners to mine other digital assets.
It is not just a matter of moving from one PoW asset to another, as ASIC miners are designed to concentrate on a single type of hashing algorithm, using SHA-256 in the context of Bitcoin.
Although the blockchain has its own advantages and disadvantages, Bitcoin Cash BCH/USD is the only realistic option.
It is questionable whether a massive influx of Bitcoin miners could be profitable or feasible on other blockchains using SHA-256 currencies, especially for many lesser-known coins.
Obtaining majority approval for this action
At least half of the network’s stakeholders must agree to support a radical change to the ecosystem for this plan to have any chance of success.
It would be very difficult to convince miners to support the move, especially those who had spent hundreds of thousands or even millions of dollars on mining farms.
Making and operating mining equipment using greener energy sources
In addition to the enormous energy requirements of Bitcoin mining and transactions in general, as well as the associated electronic waste, the Bitcoin network provides strong security due to its overall hash rate.
This in turn affects how well it can defend against a 51% attack.
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The massive use of renewable energy, or possibly nuclear power, is an important strategy to help decarbonize Bitcoin.
In addition, innovative methods must be developed to use more of the waste heat produced by machines.
As a result, especially in colder regions, miners implement creative techniques to efficiently harness this energy.
However, to make Bitcoin a truly eco-friendly digital currency, more needs to be done to make better use of these resources.
It is also crucial to effectively manage and reduce related e-waste.
To preserve stability, Bitcoin’s hash rate must increase as the network is expected to expand.
If this does not result in significant power savings being built into future machines, the overall energy intensity of mining equipment will grow.
Finding solutions for these environmental problems would also be more rational and realistic than completely changing Bitcoin’s consensus method.
Not only would it likely lead to fewer network outages, but it would also be less expensive and polarizing for society.
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