Bitcoin and Ethereum users in the EU can breathe a sigh of relief. Earlier this week the EU Parliament rejected a proposal that would have banned the use of proof-of-work blockchains. Of course, both Bitcoin and Ethereum use proof-of-work, although Ethereum is getting closer to switching away from the energy-intensive process.
Bitcoin in Ethereum are safe in the EU… for now
The vote took place in the European Union (EU) Parliament on Monday. To explain, the proposal was part of Markets in Crypto Assets (MiCA), a draft of legislation ruling on cryptocurrency in the EU. A committee voted 30-23 to remove the proposal from the draft.
In essence, the aim of the proposal was to drive blockchains away from the proof-of-work consensus method of validating new blocks on a blockchain. Significantly, both Bitcoin and Ethereum, the two largest cryptocurrencies in the world, use proof-of-work at the present time.
To sum up, proof-of-work involves a network of powerful computers competing to solve computational problems. This is how blockchain nodes verify new blocks. As a result, proof-of-work uses a huge amount of energy. Given the large carbon footprint that this leads to, proof-of-work blockchains like Bitcoin and Ethereum have come under fire in recent months. This is what the EU Parliament was looking to address with the proposal provision.
However, due to the surge in popularity of cryptocurrencies last year, not just in the EU but around the world, the proposal was heavily criticized by crypto supporters. Considering that Bitcoin and Ethereum are by far the two biggest cryptocurrencies, this hardly comes as a surprise.
What is the future of proof-of-work blockchains?
All things considered, the societal concerns with proof-of-work are warranted and won’t go away anytime soon. Even so, it seems that the upside of cryptocurrencies and what they can provide is still winning out.
For example just look at what has happened with the situation in Ukraine. The country has been able to raise millions upon millions in cryptocurrency donations over the past few weeks. It is unlikely that it would have been able to raise money at this speed and scale otherwise.
It also seems fair to say that that number might have been significantly lower if EU citizens could not have used Bitcoin and Ethereum. On a related note, Ukraine is not part of the EU. Although with the current ongoing conflict, the potential of it joining is something that is coming up in discussions more and more.
Another key point is that even without pressure from the EU Parliament, Ethereum is actively working to move away from proof-of-work. As a matter of fact, Ethereum’s move to proof-of-stake seems closer than ever. Perhaps voters in the EU parliament felt it was best to let the blockchains make these moves on their own accord.
As far as Bitcoin, that blockchain does not have any plans to move away from proof-of-work at this time. Especially now that the EU proposal has not passed. Indeed, most people believe that a move away from proof-of-work is improbable. This is because such a move would affect the miners that are vital to Bitcoin functioning.
To clarify, miners receive rewards according to the proof-of-work model. Even so, a potential solution may involve using more renewable energy to power the computers that run Bitcoin nodes.
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