The rise of cryptocurrency disrupted the traditional financial industry and captivated the world in the process. Not only does the decentralization movement prevent fraud, but for those living under authoritarian governments, it can provide a medium of exchange that resists censorship, and provides a crucial vehicle for financial freedom.
Although the cryptocurrency has been praised for its technological advancement, it has not come without moments of scrutiny. In May, Elon Musk decided to stop accepting Bitcoin as payment to Tesla, Twitter He was concerned about the “rapidly increasing use of fossil fuels for bitcoin mining.”
This is because the top cryptocurrencies – including Bitcoin, Bitcoin Cash, and Ethereum – require large amounts of energy to function. In 2020, a report showed that Bitcoin was on track to use more energy than that of 159 countries combined.
No wonder people like Musk are championing greener alternatives. Despite the fact that most new technologies come with trade-offs, this issue has sparked a debate about how blockchain networks can move towards greener practices.
This is where Proof of Work (PoW) or Proof of Stake (PoS) becomes interesting in terms of the environmental impact of the blockchain. Both PoW and PoS algorithms can have a direct impact on energy usage. However, proof of work is Usually They are known to require more energy since miners need to sell their coins to pay their bills. PoW was created as the blockchain’s native consensus algorithm and is used to confirm transactions and add new blocks to the chain to store data.
Instead, PoS discounts the percentage of coins held by a miner. Cryptocurrencies have adopted them to maximize energy efficiency because they usually have significantly lower levels of consumption since miners are not required to solve complex mathematical problems, as in the case of PoW blockchains. For this reason, PoS has been the default choice for the majority of new blockchains.
With this said, the argument that blockchains that rely on Proof of Work are unable to provide energy-efficient mining solutions is not entirely accurate. With the advancement in scalability, new Proof of Work technology has emerged that allows this type of mining to be as environmentally friendly and secure as PoS.
Although PoS blockchains may look better for the environment on the surface, upon closer examination, they cause multiple problems due to their lack of scalability. On the other hand, while PoW-based blockchains seem to use more power initially, they could also have the potential to be more environmentally friendly and more secure than PoS-based blockchains.
During the blockchain boom, while most players in the industry opted for PoS mechanisms for the promise of high energy efficiency, one organization, Kadena, focused its efforts on scalability and dedicated its time to building a more robust core solution from blockchain.
While PoS blockchains argue that Proof of Work is not sustainable, the most important factor contributing to PoW’s energy efficiency is Transactions Per Second (TPS). Kadena claims to have the ability to drive up to 100,000 TPS, which will be confirmed in testing later this year.
Not only will this be groundbreaking speed, but it will also make it the only scalable PoW blockchain in existence. Compared to PoS, which can sometimes only achieve 10 TPS, this is a much faster and environmentally friendly protocol.
Many PoS systems that once had high hopes for a PoS solution to surface-level problems are now faltering. This week, Solana crashed due to high demand, Arbitrum was shut down, and Ethereum was attacked. As flaws in PoS-based blockchains begin to be exposed and the need for a more sustainable solution becomes more pressing, Kadena, the only public, shared, scalable Layer 1 network, offers a powerful solution to the masses.
Learn more about how the leading blockchain is disrupting the DeFi space at Kadena’s website.