{"id":612932,"date":"2023-02-28T03:30:00","date_gmt":"2023-02-28T09:30:00","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/02\/28\/ethereum-moved-to-proof-of-stake-why-cant-bitcoin\/"},"modified":"2023-02-28T03:30:00","modified_gmt":"2023-02-28T09:30:00","slug":"ethereum-moved-to-proof-of-stake-why-cant-bitcoin","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/02\/28\/ethereum-moved-to-proof-of-stake-why-cant-bitcoin\/","title":{"rendered":"Ethereum moved to proof of stake. Why can\u2019t Bitcoin?\u00a0"},"content":{"rendered":"
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Tech Review Explains: Let our writers untangle the complex, messy world of technology to help you understand what’s coming next. You can read more here<\/a>.<\/em><\/p>\n

Last year, Ethereum went green. The second-most-popular crypto platform transitioned to proof of stake, an energy-efficient framework for adding new blocks of transactions, NFTs, and other information to the blockchain. When Ethereum completed the upgrade, known as \u201cthe Merge,\u201d<\/a> in September, it reduced its direct energy consumption by 99%. Meanwhile, Bitcoin continues to chug along, consuming as much energy as the entire country of the Philippines<\/a>.\u00a0<\/p>\n<\/p><\/div>\n

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Bitcoin mining, the computationally intensive process by which new coins are created and accounted for, has become a global concern. After China cracked down on the process in mid-2021, miners sought out other areas of the world where energy was cheap, but not always clean. In places like Kazakhstan, miners put pressure on the power grid<\/a>, which relies heavily on carbon-intensive coal-fired power stations, causing localized blackouts and contributing to civil unrest. In upstate New York<\/a>, where miners took over shuttered factories and empty warehouses, locals have complained of rising energy bills and the high-frequency whine of whirring data center fans\u2014and worried about the environmental toll mining is taking. The US currently hosts 38% of all bitcoin mining operations.<\/p>\n

A single Bitcoin transaction uses the same amount of energy<\/a> as a single US household does over the course of nearly a month. But does it have to be that way? The Bitcoin community has historically been fiercely resistant to change, but pressure from regulators and environmentalists fed up with Bitcoin\u2019s massive carbon footprint may force them to rethink that stance.<\/p>\n

A variety of other countries, including Kazakhstan, Iran, and Singapore, have also set limits on crypto mining. In April 2023, the European Parliament is due to pass<\/a> a landmark crypto bill called Markets in Crypto Assets (MiCA)<\/a>, which mandates environmental disclosures from crypto firms. The law is expected to go into force sometime in 2024.<\/p>\n

That may be just the start for the EU: the European Central Bank has previously stated<\/a> it cannot imagine a world where governments would ban gasoline-powered cars in favor of electric vehicles but not act on Bitcoin\u2019s persistence in pumping out CO2. \u201cSome members of the European Parliament are already wondering <\/a>why Bitcoin is not following Ethereum,\u201d Alex de Vries, the data scientist behind Digiconomist, a website that tracks cryptocurrency energy use, told MIT Technology Review.\u00a0<\/p>\n

Efforts to crack down on Bitcoin\u2019s waste are gaining steam in the US as well. In November, New York became the first state to enact a temporary ban on new cryptocurrency mining permits<\/a> at fossil-fuel plants. The new law<\/a> also requires New York to study crypto mining\u2019s impact on the state\u2019s efforts to reduce its greenhouse-gas emissions.<\/p>\n

So what would it take to make a switch?\u00a0<\/p>\n

Proof of work vs. proof of stake<\/strong><\/h3>\n

Cryptocurrencies have no central guardian, like a bank, to oversee their public ledgers\u2014the shared digital record of every transaction on the blockchain. Instead, they rely on consensus mechanisms to agree on updates. In proof of work, the approach Bitcoin relies on, a worldwide network of computers\u2014known as \u201cminers\u201d\u2014spends electricity trying to win a lottery of sorts. Whoever wins gets to append the next block and collect new coins in the process. The chance of winning is in direct proportion to the number of computations a miner does. As a result, massive server farms have sprung up around the globe dedicated solely to winning this lottery.\u00a0\u00a0\u00a0<\/p>\n

Proof of stake, the approach Ethereum now uses, does away with this massive energy consumption. Instead of miners, proof-of-stake systems employ vast numbers of \u201cvalidators.\u201d To become a validator, you have to deposit, or \u201cstake,\u201d a set amount in coins\u201432 ether, in the case of Ethereum<\/a>. Staking gives validators a chance to check new blocks of transactions and add them to the blockchain so they can earn rewards on top of their staked coins. The more coins you stake, the better your odds of getting picked to add the next block of transactions to the chain.\u00a0\u00a0\u00a0<\/p>\n<\/p><\/div>\n

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Both systems strive to achieve the same goal, but one uses a country\u2019s worth of electricity, while the other simply requires participants to lock up coins. Both are decentralized in theory, but not in practice. The vast majority of bitcoin mining today is done with five major mining pools<\/a>. In proof of stake, those with the majority of coins control the blockchain.\u00a0\u00a0<\/p>\n

Ethereum faced different pressures<\/strong><\/h3>\n

Bitcoin is only one cryptocurrency. It has one set of developers and one set of miners. But Ethereum is a smart-contract platform for decentralized applications, with lots of projects, cryptocurrencies, NFTs, and NFT platforms running on top of it.\u00a0<\/p>\n

Vitalik Buterin, Ethereum\u2019s creator, always intended for Ethereum to use proof of stake. But when Buterin realized that developing a proof-of-stake algorithm to achieve a meaningfully decentralized system was \u201cnon-trivial<\/a>\u201d\u2014so much so, he once wrote, that some people said it was impossible\u2014he decided to have Ethereum use proof of work while he chipped away at the problem. The move to proof of stake ultimately took seven years.<\/p>\n<\/p><\/div>\n

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Many of the major projects on Ethereum, including crypto exchange Coinbase, stablecoin companies Circle and Tether, and NFT projects Yuga Labs and OpenSea, had publicly supported Ethereum\u2019s move to proof of stake. It had appealing advantages over proof of work. In addition to the environmental benefits, transaction fees would be lower. When Ethereum finally migrated, these projects led the way. The battle was won before the Ethereum Foundation, the nonprofit that helps supervise the platform, pushed the red button.<\/p>\n

There was always a risk that Ethereum miners would create a competing chain and keep the proof-of-work version of Ethereum alive. All the smart contracts, coins, and NFTs that exist on the current chain would be automatically duplicated on the \u201cforked,\u201d or copied, chain. But while there were some efforts<\/a> to create competing versions of Ethereum, none of these gained traction, and the proof-of-stake version won out.<\/p>\n

A matter of politics<\/strong><\/h3>\n

In principle, a small group of people could take the reins and switch Bitcoin to proof of stake. Since it is an open-source project, Bitcoin\u2019s development relies on decisions made by the community, which in theory includes anyone who wants to participate. But updates to Bitcoin\u2019s code are actually controlled by a small core team of developers<\/a>, known as \u201cmaintainers,\u201d whose salaries are privately funded by influential groups such as Blockstream, a Bitcoin startup; Coinbase, the largest crypto exchange in the US; and the MIT Digital Currency Initiative, a research project hosted by the MIT Media Lab.\u00a0<\/p>\n

These maintainers could make a switch as Ethereum has done. But they are a conservative bunch. Bitcoin was the original proof-of-work cryptocurrency. And although tweaks and updates are made to Bitcoin\u2019s code all the time, it has varied little from its original 2009 vision.\u00a0<\/p>\n<\/p><\/div>\n

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Among Bitcoin purists, there is fear of making radical changes, Emin G\u00fcn Sirer, the creator of Avalanche, a competitor to Ethereum, told MIT Technology Review. \u201cThat fear stems partly from not wanting to take on any risk, and partly from the fear that such changes might ultimately erode the faith in other algorithmic restrictions,\u201d he says. Those restrictions include other elemental features like the maximum possible number of bitcoins that can ever be mined, which was fixed at the outset at 21 million.<\/p>\n<\/div>\n

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\u201cThere is no technical obstacle to switching Bitcoin to proof of stake,\u201d Jorge Stolfi, a computer science professor at the State University of Campinas in Brazil, who has followed Bitcoin closely since its early days, explained to MIT Technology Review.\u00a0<\/p>\n

But the core maintainers can\u2019t make the switch alone, Stolfi says. They need the support of miners, who currently collect 900 new bitcoins per day (worth over $20 million), plus transaction fees for the new blocks they mine. Facing the possibility of abandoning that business model, miners \u201cwill probably try to keep a proof-of-work branch of the coin alive and will insist that they are the true Bitcoin, and the proof-of-stake branch is just another shitcoin<\/a>,\u201d says Stolfi.<\/p>\n

Ultimately, Stolfi says, the battle between a new proof-of-stake branch and the \u201ctraditional\u201d proof-of-work branch would be decided by how the Bitcoin price split between the two coins. \u201cAnd that depends entirely on marketing.\u201d\u00a0<\/p>\n

Bitcoin Cash: a lesson in history<\/strong><\/h3>\n

The last time anyone tried to make a major change to Bitcoin was with Bitcoin Cash, an effort to increase the block size so Bitcoin could scale and become more useful as an actual currency.<\/p>\n

Since 2015, Bitcoin\u2019s one-megabyte blocks had been filling up with transactions. The network was becoming congested, so that transactions were taking longer to process and transaction fees were increasing. A group of developers and miners proposed a simple fix: raise the size of a block of transactions to two or eight megabytes so that Bitcoin could process more transactions per second.\u00a0<\/p>\n<\/p><\/div>\n

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But that was easier said than done. As David Gerard, author of Attack of the 50 Foot Blockchain<\/em>, wrote<\/a>, \u201ceven this simple proposal led to community schisms, code forks, retributive DDOS attacks, death threats, a split between the Chinese miners and the American core programmers, and other evidence that this and other problems in the Bitcoin protocol could never be fixed by a consensus process.\u201d\u00a0<\/p>\n

Bitcoin Cash did launch, as a fork in the Bitcoin software in August 2017. But the majority of the miners and developers stuck with the traditional chain, and Bitcoin Cash became just another Bitcoin spinoff. Even today, Bitcoin promoters refer to Bitcoin Cash as a \u201crebellion<\/a>\u201d and a \u201ccorporate takeover<\/a>,\u201d as opposed to a sincere effort to improve Bitcoin\u2019s usability.\u00a0<\/p>\n

Proof of stake would represent an even bigger change. And on the surface, it seems there might be little reason to expect that Bitcoin would ever adopt it. Nicholas Weaver, a researcher at the University of California, Berkeley, and an outspoken critic of cryptocurrency, does not think it will ever happen. As long as bitcoin miners can profit from proof of work, Weaver says, they will choose proof of work: \u201cThe only way to reduce Bitcoin\u2019s criminal energy consumption is for the value itself to be destroyed. If Bitcoin becomes worthless, then bitcoin mining stops.\u201d<\/p>\n

Bitcoin may not want to change. But if it doesn\u2019t, it might be forced into irrelevance by governments and communities that are becoming increasingly intolerant of its energy waste.\u00a0<\/p>\n

\u201cThe never-change-Bitcoin crowd is fighting a losing battle,\u201d says Digiconomist\u2019s de Vries. \u201cThe sooner they realize this, the sooner we all benefit.\u201d<\/svg> <\/p>\n<\/div>\n<\/div>\n

Read More<\/a>
\n Amy Castor<\/p>\n","protected":false},"excerpt":{"rendered":"

Tech Review Explains: Let our writers untangle the complex, messy world of technology to help you understand what’s coming next. You can read more here. Last year, Ethereum went green. The second-most-popular crypto platform transitioned to proof of stake, an energy-efficient framework for adding new blocks of transactions, NFTs, and other information to the blockchain. […]<\/p>\n","protected":false},"author":1,"featured_media":612933,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25740,534,346],"tags":[],"class_list":{"0":"post-612932","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ethereum","8":"category-financial","9":"category-moved"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/612932","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=612932"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/612932\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/612933"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=612932"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=612932"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=612932"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}