PoS is Slowly Killing PoW with Its Sustainability and Scalability

The Ethereum Merge marks the greatest shift from Proof of Work to Proof of Stake

A decade ago, blockchain was the ultimate wild west! But today, talking about crypto mainstream adoption feels a little redundant. According to data, over 300 million people use crypto, which includes major tokens like Bitcoin and Ethereum.?

One of the major goals of crypto is solving the conundrum of financial inclusion for billions of people across the globe. As it stands, many remote regions in the world have no access or very limited access to financial services.?

This is where blockchain made its debut with the amazing ‘decentralized’ concept. Without the help of central authorities or institutions, verifying transactions presents a challenge. However, the crypto industry uses ‘consensus mechanism’ to regulate this process and verify the transactions.?

The two largest cryptocurrencies, Bitcoin and Ethereum 1.0, use ‘Proof of Work’ to validate the blocks. PoW requires enormous computing power and electricity. Bitcoin alone is estimated to consume 127 terawatt hours (TWh) a year. This usage exceeds the entire annual electricity consumption of Norway.?

As a result, the interest in the ‘Proof of Stake’ mechanism has intensified. It is reported that using the PoS mechanism can result in 99% less energy consumption compared to PoW.?

So this instigates a few critical questions on the future of consensus mechanism- Can PoS make crypto environment-friendly? Will the explicit use of PoS across multiple blockchain result in the demise of PoW??

What is Proof of Work (PoW) and Proof of Stake (PoS) Mechanism?

To understand Proof of Work, it is necessary to learn how Bitcoin functions. The idea of Bitcoin came into existence in a 2008 whitepaper published by an anonymous author who used the pseudonym, Satoshi Nakamoto. It was the first time PoW was used to verify and record transactions in a real-world scenario.?

Proof of Work is the blockchain consensus mechanism in which computing power is used to verify cryptocurrency transactions and add them to the blockchain. Bitcoin miners use specially constructed computers and consume a lot of energy in the process.??

This could result in, as Elon Musk has stated in a tweet, “insane” energy demands as it scales larger.?

On the other hand, Proof of Stake takes a completely different approach to validate blocks. To participate in the blockchain verification process, users create a node, which can be run by one person or a pool of people. The node is required to prove its security and trustworthiness by locking away a certain amount of digital tokens.?

Since PoS doesn’t take extra energy to add new tokens, it is much more energy efficient. The nodes are virtual spaces, not physical equipment. Researchers insist that energy consumption for Proof of Stake is 99.9% lower than for Proof of Work.?

Difference Between Proof of Work and Proof of Stake

In PoW, miners solve complex mathematical puzzles using computational power to add a block to the network. During the process, the miners have to continuously expand computational power to solve the perplex. The biggest setback in PoW is that the energy consumption here is directly proportional to the amount of computational power being used.?

Contradicting this process, Proof of Stake uses the crypto staking method to validate the nodes. The greatest flex of PoS is that it consumes low energy, and reduces e-waste. It requires less specialized hardware and fewer device replacement.?

The PoS Effect on Energy Consumption and Carbon Footprint?

According to a study by the University of Cambridge, the PoW-based Bitcoin consumes more electricity than the entire country of Argentina. The whole consumption results in the emission of more than 36 million tons of CO2 per year.?

In comparison, Ethereum is expected to reduce its energy consumption by 99.95% and carbon footprint by 99.98% after the switch from PoW to PoS.

This means that the crypto industry can operate at a fraction of the environmental cost of PoW, maintaining a high level of security and decentralization.?

The United Nations released Sustainable Development Goals in 2015 to address the most pressing concerns of humanity. One of them is climate change. PoS has the potential to support and achieve some of these goals.?

Ethereum Merge is Leading the PoS Mission

Since Proof of Stake solves the energy efficiency and sustainability issues, it is pushing many blockchain systems to transform their functionalities into PoS mechanism. The first and major such switch came from Ethereum.?

The historical shift, which was cherished as the ‘Ethereum Merge’ or ‘The Merge’, moved the ETH network from PoW to PoS. Ethereum Merge is expected to make the network more sustainable and scalable.?

Will Proof of Stake Sentence the Demise of Proof of Work?

Proof of Stake is an amazing concept, but ‘The Merge’ gave a great boost to it. Ethereum Merge is described as one of the largest open-source software events in the history of digital tokens.?

The staking concept is offering a reformation to the blockchain industry that has long failed to keep track of environmental records. Besides, the growing focus on climate change across the globe has made it a necessity for the crypto industry to consider an alternative.?

However, it is unlikely that Proof of Work will be entirely replaced by Proof of Stake shortly. As public awareness around climate change intensifies, PoW might find its way to become a more sustainable mechanism.?

Long Story Short

Going beyond sustainability and security, Proof of Stake is a more scalable and adaptable mechanism. It can enable blockchain networks to handle more transactions, users, and applications, without touching the security points and decentralization.?

PoS can also support innovation and help unleash new features and functionalities. Therefore, Proof of Stake will pave the way for the next generation of blockchain development.?