Simply put, Proof of Work is the first, and arguably the most robust and secure, consensus mechanism that first grabbed the world's attention in the last decade with the sky-rocketing popularity of the mega-star of the crypto world 'Bitcoin'. With a market cap of close to USD 350 Billion out of a total estimated crypto-market cap of USD 555 Billion, at the time of writing as per coinmarketcap.com, Bitcoin is the undisputed star attraction of the brave new world of cryptocurrency and DeFi. PoW has had a big hand to play in this, by giving the anonymous and trustless world of crypto, the very important attributes of trust, security and credibility, that we value so much, when dealing with our hard-earned money. It has pulled Bitcoin, and as an extension the whole of crypto, from its cocoon of arcane and mystery, to the legitimacy and dependability of real-world, mainstream economics. But in this world of belatedly increasing awareness of the global environmental crisis, has the computationally dense and power-guzzling PoW mechanism overstayed its welcome?
Proof of Work is a consensus mechanism used to build trust in the anonymous world of crypto. Each new block or addition of value in a blockchain, which creates the immutable history of all the transactions happening in bitcoin all over the world in a distributed ledger, has to be validated by this mechanism. This ledger hasn't been hacked even once, even in this terrifying new world of quantum computing. Why is that? Simply because it is almost impossible to replicate the amount of computational energy required by PoW for each block formation, in an attack that would additionally require more than 51% of the millions of nodes/participants to collude and use unfathomable amount of computational power to regenerate each proceeding block, from the block of first change, within a short time frame of 10 mins. PoW is what gives crypto its trust, immutability and transparency, unseen in the world of legacy finance and world economics, which is still dependent on gargantuan behemoths like banks and central banks to provide that.
However, in order to achieve this PoW, just the Bitcoin blockchain uses around 0.2% of total global energy, while the value share of Bitcoin in the Total Global Economy stands at 0.002%. This is simply untenable if bitcoin and crypto-currency has to become truly mainstream and realize its full potential of making wealth truly democratic, equitable and accessible to all. No more concentration of power, wealth and influence in the hands of a select few.
Besides being as far away from being "Green", as anything I can think of, PoW has also become the biggest roadblock in crypto achieving its aforementioned goal. When bitcoin was just another new fad for the adventurous and tech-savvy millennials in the early 2010s, anyone with a decent GPU on his PC could download the bitcoin client and participate in mining Bitcoins, thereby earning bitcoins as mining rewards. That was when the no. of nodes on the bitcoin network was in a few hundreds and the total computational power required by PoW was still within the reach of the common man, so to speak. Now with the computational power requirements in the network for mining having risen exponentially, PoW has given rise to centralization, the very nemesis blockchain set out to conquer. It has given birth to mining pools; massive mining farms with thousands of ASICs, accompanied by endless cooling towers, all lined up to do only one thing; keep computing the hash gazillion times till the PoW for a block is complete. This has taken mining out of the reach of the common man or cybergeek, piggy-backing on whom bitcoin became the behemoth it is today. This has led to a handful of entities spread across the US, Europe and China having close to a monopoly on bitcoin mining and hence the entire network. Profitability provided by the economies of scale that these mining pools enjoy has made centralization inevitable.
These issues have not gone unnoticed by the crypto-community. Pioneers in the field have dabbled with consensus mechanisms like Proof-of-Stake, Proof-of-Use, Proof-of-Elapsed Time, Proof-of-Authority, and many more. Ethereum 2.0, the blockchain with Ether as its native currency, the second most valuable cryptocurrency after Bitcoin, is moving into PoS from PoW in the near future, for example. However, we as a community of forward-thinkers have yet to come up with a consensus mechanism which marries the security and reliability of PoW while shunning its tendencies of centralization and incomprehensible wastage of electrical power. Yet, we cannot wait for a panacea of consensus mechanism to magically appear, for us to finally do away with the expensive and increasingly morally-hazardous PoW. It has overstayed its welcome and has to go now.
Bitcoin, with the headstart it has had and the network effect that has eventually kicked in, will remain the leader and most-valued crypto for the foreseeable future. Hence, the onus is on it to lead us into the unknown but exciting new future. The relative centralization of the network should work in its favour by making quicker decision-making possible. It should shun PoW in favour of a new consensus mechanism, which is more in tune with the realities of the new decade.