How Ethereum’s Shift to ‘Proof-of-Stake’ Could Reduce Environmental Concerns

What is proof-of-work?

Modern technology evangelists believe that Bitcoin is one of the most important inventions of the 21st century. With the release of Bitcoin in 2008, PoW became the de-facto algorithm for cryptocurrencies. Miners are individuals or entities who are housekeepers of the distributed ledger and manage nodes(chain of computers) to solve complex mathematical problems. The miner who solves the problem first gets a chance to add a block of transactions to the chain of blocks, thus creating a single and verified transaction on the immutable PoW blockchain. In return, they are incentivized with a reward coin.

PoW is a tried and tested mechanism that has kept Bitcoin and Ethererum secure and decentralized for many years. Also, compared to PoS, it is comparatively easy to implement.

But with time, PoW has posed several challenges like — accessibility, centralization, and scalability.

• Accessibility — Bitcoin mining is not an easy job. Apart from understanding the ever-changing technological landscape and acquiring highly skilled professionals, setting up large mining farms with extensive computational power is highly energy-intensive.
  The recent data shows that China mined more than 65% of Bitcoin in 2020 which is, of course, a country to afford low electricity and skilled professionals. Due to China’s monopoly in the consensus mechanism, other entries might not be able to perform operations and that leads to the second challenge.
• Centralization — The underlying principle of a cryptocurrency is to keep the ledger decentralized. But if individuals are not able to afford to mine and the consensus goes into the hands of large entities (in this case Chinese miners), then the whole purpose of decentralization seems to be defeated.
• Scalability — In the current PoW blockchain, the mining of each block occurs consecutively and each block can hold a certain amount of data, called block size. If the pending high transaction events cannot make it to the existing block mined, the users might need to wait for their transactions to be processed.

Source: https://medium.com/geekculture/how-ethereums-shift-to-proof-of-stake-could-reduce-environmental-concerns-986c3fe676e4?source=rss——-8—————–cryptocurrency