Global Crypto Adoption And The Fate Of POW?

in LeoFinance2 years ago


With the rate at which cryptocurrency adoption is going, it won't be surprising to see cryptocurrency becoming a major part of the financial system in coming years. The Russia-Ukraine war has opened the eyes of the world to the benefit of a decentralized financial system where everybody can send and receive money faster irrespective of where the person is, and at the comfort of one's home.

I am quite certain that Cryptocurrency and Non fungible tokens are here to stay but there are concerns on the mechanism at which some Cryptocurrencies operate. Presently, we have the proof of work ( POW), the proof of stake ( POS) and the Delegated proof of stake (DPOS). The proof of work mechanism on which the first cryptocurrency assets, Bitcoin and Ethereum operate. It has its flaws when it comes to scalability and environmental effects. This is why the proof of stake and delegated proof of stake were introduced to offer an eco-friendly method of validating cryptocurrency transactions.

When the government saw that stopping cryptocurrency transactions is going to be a difficult one because of lack of valid reasons to do so, they lay claims on the environmental impact of the Proof Of Work mechanism. This has made the likes of Ethereum and Dogecoin to sort for Proof of Stake migration.

We remember very well how Elon Musk moved the Bitcoin market when Tesla started accepting Bitcoin payment and how he also crashed the Bitcoin Market when he said that Bitcoin mining is not environmentally friendly. The EU is also on the plan to regulate cryptocurrency transactions and operations that pose environmental risks. According to them, " crypto assets shall be subject to minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered, or admitted to trading in the Union".

With this, we can see a great future and adoption for cryptocurrency but mostly for those who pose less environmental threats. For Ethereum, there is hope that they will certainly migrate to Proof of Work mechanism because the crypto assets have well-known founders but for Bitcoin, it will be a hard nut to crack. If the EU ban should be strict on POW crypto assets, we will likely see this number crypto assets lose it's position. For countries like El Salvador that have adopted Bitcoin, it might not really be good for them. Nevertheless, I believe Bitcoin has gotten to a height where banning it will be a difficult one because it will require huge energy to get all the countries to agree to it. This is why there is ongoing research for a better mining process for Bitcoin and other POW assets. There have been claims that there is currently a greener way to mine Bitcoin but those claims have not received a legal acceptance.

One may thus wonder whether it is risky to keep Bitcoin for long term purposes. For me, it is all about following the activities of other crypto lovers. Presently, people are still confident with Bitcoin , thus I won't risk losing my Bitcoin for what may not happen in the end. Many influencers have accepted Bitcoin as a store of value which is part of the reason why some of them have invested in it. This however doesn't make other crypto assets less. Just follow the market trend, have your own goal for Bitcoin and you will be safe.


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