The reports of Ethereum Classic getting hacked took the entire crypto world by storm. Since Ethereum Classic is employing the famous Proof-of-Work (PoW) consensus algorithm at its core, questions have begun to arise regarding the safety of other PoW employing chains. Not going far beyond, the world’s leading cryptocurrency in terms of market capitalization, bitcoin, is also employing PoW underneath. Does this mean we need to move on from PoW? The answer, probably yes, not just because of the hacking issue, but also due to the energy consumption problem.
The bitcoin network across the globe is using more power right now than the country of Denmark. Miners use heavy-duty hardware in order to perform mining and get rewards. A large amount of electricity is required to run these mining nodes continuously. Besides, the coal-based energy used to run these nodes results in further pollution of our environment. Global warming, hence, might be directly getting worsened as a result of the electricity used for mining. Energy consumption is becoming a serious issue as more and more people are entering the bitcoin ecosystem.
BlockPublisher recently got in touch with Lizzie Parmenter, consultant for Pelicoin, as she shared her views regarding Proof-of-Work. Talking about the question regarding PoW being flawed, she said:
Lizzie: “Proof of Work is energy inefficient, and continuing to rely on this proof could result in friction and centralization down the line.
Proof of Contribution may be a preferable alternative. It does not rely on mining, and instead reaches consensus by gauging useful contributions from users that support the network. Network attacks are prevented due to the astronomical costs of overloading the system.”
As suggested by Lizzie, PoW might result in the problem of centralization in a decentralized network. With more mining power, the chances of solving the cryptographic puzzles in the network increase and as a result, more rewards can be obtained by an entity. This partly integrates the issue of centralization in the network. Besides, in order to run heavy-duty hardware continuously, a lot of energy is needed.
It probably is about time we start to look forward to different alternatives in order to maintain a blockchain network and reach consensus. It’s about time we choose a more eco-friendly and fair network maintenance algorithm instead of PoW.