Chris Larsen's Bitcoin Greenification Plan is Impractical

Larsen's approach appears to be intriguing at first look. The environmental effect of proof-of-work mining is probably Bitcoin's most significant disadvantage. It is also a persistent impediment to the general public's understanding of cryptocurrency. For example, rhetoric about environmental damage has contributed to widespread and sometimes misguided animosity toward non-fungible tokens (NFT) in the art world.

However, industry experts and onlookers have reacted with skepticism and distrust to Larsen's efforts. This is due, in part, to the fact that as noble as Larsen's intention appears to be, the campaign's proposals are exceedingly risky, totally unrealistic, and maybe even absurd. More importantly, Larsen's motivations for the idea are highly dubious. He has spent the last decade as a co-founder of Ripple, arguably competing with Bitcoin.

Risks Involved

The first issue with Larsen's plan is that moving Bitcoin to proof-of-stake security would be extremely risky. The change would be so significant that it would almost certainly be impossible to achieve via a traditional "hard fork." This happens when certain members of the Bitcoin network move to an incompatible software version. Hard forks have previously been utilized to create modified versions of Bitcoin, most notably in the 2017 Bitcoin Cash split.

However, Bitcoin Cash and related forks only tweaked technical parameters originally set in the proof-of-work mechanism, such as block size. Rather than modifying current parameters, a proof-of-stake-based Bitcoin would almost certainly need a complete redesign. This is because a proof-of-stake system runs on a completely new security architecture. This would entail a considerably more complex operation of moving existing wallet balances to a new network called "Bitcoin."

Ethereum's move from proof-of-work to proof-of-stake exemplifies this. Ethereum 2.0  will be a phased transition to a new system. Rather than a direct continuation of the present Ethereum chain. For years, a "Beacon Chain" for the new system has been operating alongside Ethereum 1.0. The merger of the two has been carefully handled by a strong core group of Ethereum companies and developers.

There's a little probability that a similarly unified and powerful organization will emerge to handle such a transition for Bitcoin. One cause is widespread skepticism about proof-of-stake security. Many people in the Bitcoin ecosystem have interests and agendas that might diverge dramatically if large network modifications are proposed. Bitcoin miners, for example, who have invested millions of dollars on specialized chips known as ASICs (application-specific integrated circuits) for proof-of-work mining are extremely unlikely to support a proof-of-stake transition.

Reactions from Bitcoiners

These facts help explain why Larsen's plan has come with not just dissent but also vehement and frequently quite personal condemnation from bitcoiners. Like Twitter and Facebook, Bitcoin is heavily reliant on "network effects." It becomes more helpful as more people use it. While Larsen's idea has little chance of convincing every bitcoiner to transition to a new proof-of-stake system, it may convince some of them. This may result in a "hard split" in the community, if not in the network itself.

This division has the potential to damage Bitcoin. Furthermore, Larsen's history appears to have fueled uncharitable conjecture about the campaign's real objectives. Ripple has often claimed over the past decade that the XRP currency established by its co-founders is a superior system to Bitcoin. The company has sold over $1.3 billion of the token to the public despite relatively little progress in its ambition to develop an interbank transfer system.

Conclusion

This has resulted in a big, continuing struggle with the U.S. Securities and Exchange Commission and many bitcoiners harboring enduring hostility toward Larsen and the whole Ripple organization. This, in many regards, is intrinsically and deeply antagonistic to Bitcoin.