Were the controversial provision to have made it into the MiCA draft, the ground could have been laid for a swift exit of many crypto firms from the EU, something already happening due to the inability of VASPs to comply with regulations such as the FATF Travel Rule and the host of anti-money laundering directives (e.g. Jake Chervinsky, head of policy at the Blockchain Association, tweeted that had the opponents of proof-of-work won, they would have come after proof-of-stake next, calling it a divide and conquer strategy.ĭigiconomist founder Alex de Vries explained that the issue was likely to rear its head again, as there is currently no serious plan from within the crypto industry to do anything about the energy usage of Bitcoin. The reaction to the MiCA draft moving forward without the proof-of-work mining ban has been positive, but many stress caution for what still lies ahead. While only a fraction of BTC mining is conducted in the EU now, the impact would have been felt, and could very well have set the stage for further stifling regulations. Therefore Bitcoin has no clear pathway to shifting to PoS, and the barely dodged provision likely would have led to a ban sometime in 2025 on the world’s largest cryptocurrency by market cap. Proof-of-Work is another matter altogether, with most of Bitcoin’s most fervent support base believing the high energy consumption it elicits is a necessary evil to ensure that the blockchain remains fully decentralized and censorship-free. While the Bitcoin Core protocol has been seen recent updates such as SegWit (2017) and 2021’s Taproot protocols, these took a couple of years each to push through. The Bitcoin developer community is notoriously resistant to change, as 2017’s Bitcoin Cash hard fork showed. Proof-of-Stake on the other hand requires very little computing power, instead of relying on qualifying or selected users’ sizable contributions of smart contract-locked native assets that accrue rewards or interest (“staking”) to process transactions and provide network stability. #Ethereum cryptocurrency will jettison upgrade#Proof-of-work is employed by older cryptocurrencies, most notably Bitcoin and Ethereum, though the latter has plans to soon upgrade to the newer and more energy-efficient proof-of-stake (PoS) model through its Ethereum Merge later this year. This requires vastly increasing computing power (and therefore electricity) as the network and its ledger grow in size and users and the mining algorithm grows exponentially in difficulty. Proof-of-Work is the name for the consensus mechanism that uses hash power (computing power) to validate a blockchain’s transactions and issue new cryptocurrency rewards for “mining”. Here’s a very simplistic and quick explainer of PoW vs PoS: In this article, we’ll take a look at the proposal, what is likely to happen next, and whether proponents of the PoW ban still have any tricks left in their bag. The MiCA provision would have amounted to an outright ban on the oldest cryptocurrency and might well have made Europe a backwater for innovation in the digital-assets sector. While newer cryptocurrencies tend to validate their nodes with a proof-of-stake (PoS) model – which Ethereum is currently moving towards – Bitcoin essentially has no practical path forward to make such a transition. The significance of the ban, had it gone into effect, would be hard to overstate. The rejected MiCA provision would have restricted the use of proof-of-work (PoW) cryptocurrencies such as Bitcoin due to objections over their energy usage. The crypto community is breathing a collective sigh of relief after the European Union jettisoned a regulatory provision on 17 March 2022 that some had called a “de-facto Bitcoin ban.” The provision in question was a part of the EU’s long-awaited Markets in Crypto Assets (MiCA) framework, which one day will standardize licensing for crypto firms across the union.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |