Benjamin Brandtner, journalist of the Austrian newspaper DER STANDARD interviewed me a day after Ethereum Merge network update. I explained what the merge means for Bitcoin and what is preventing the largest cryptocurrency from becoming greener.
Find the original article in German HERE
Thank you Benjamin Brandtner, 16 September 2022
"Bitcoin's high energy consumption has the advantage of offering security against attacks and thus being able to guarantee stability," says blockchain expert Robby Schwertner also known as CryptoRobby
Ethereum's "merge" caused a big stir in the cryptocurrency world in recent days. Behind it is a technical software upgrade that switches the network's consensus mechanism to a proof-of-stake model. With this step, Ethereum aims above all to reduce its carbon footprint by more than 99 per cent and thus shed its image as a climate polluter. Such a reduction still seems unimaginable for industry leader Bitcoin. But why actually? DER STANDARD asked Austrian blockchain expert Robert Schwertner what the Merge means for Bitcoin and what is preventing the largest cryptocurrency from becoming greener.
STANDARD: How do you assess the Ethereum merge so far?
CRYPTOROBBY: The merge has been very successful so far, no significant problems have emerged. On the contrary, the blockchain seems to be running very stably, although it will only become apparent in the next few days whether this also applies to all applications. As with all computer programmes, some errors are very obvious, and some are very hidden, but the biggest hurdles should soon be overcome.
STANDARD: Bitcoin's market capitalisation is more than twice that of Ethereum. Shouldn't the priority be to reduce the energy consumption of the most robust cryptocurrency?
CRYPTOROBBY: Quite right, Bitcoin is now the environmental enfant terrible among blockchains. It is the most important blockchain, but it has also been a laboratory project that has evolved tremendously. I agree with the justified demand to make this blockchain more energy-efficient.
However, making Bitcoin more energy-efficient with a changeover is not failing because of the technology, but mainly because of the people involved. The resistance is very high: Bitcoin has an incredible number of miners involved, and investors rely on the stability guaranteed by energy consumption. The people involved simply don't want to give that up.
STANDARD: Do you think Ethereum can pressure Bitcoin with the Merge?
CRYPTOROBBY: Bitcoin is definitely coming under pressure. The need for explanation is there, why you can't also convert, and in terms of software, a conversion would also not be a difficult undertaking. The will is simply missing. I know two companies from my practice that have not used Ethereum so far, but are now considering using it because the network now complies with the company's guidelines. You can see that the merge is causing a change in thinking.
STANDARD: What speaks against Bitcoin also switching to Proof of Stake?
CRYPTOROBBY: That's like wanting to abolish cash. Sure, it consumes a lot of energy, metal and paper. But you can't because people want it, and it's similar to Bitcoin. Bitcoin's high energy consumption has the advantage of offering security against attacks and thus being able to guarantee stability. That is precisely what investors and miners want. At the moment, I don't see a solution there.
STANDARD: Would there be realistic alternatives to switching the consensus process to reduce Bitcoin's carbon footprint?
CRYPTOROBBY: Of course, there would be intermediate solutions. Not everything has to be stored on the Bitcoin blockchain. But a major problem with Bitcoin is that there are not as many developers available as Ethereum to take this blockchain further. That is why most applications and innovations happen on Ethereum. Bitcoin has a different value. It is a store of value system. In times of high inflation, this also has its justification.
STANDARD: The US is currently the most important location for Bitcoin miners. At the same time, the US government has put a mining ban on the table in case operators do not adhere to environmental standards. What consequences could that have?
CRYPTOROBBY: That's true. In contrast, Europe no longer plays any role in bitcoin mining. Even if mining were banned there, it would have no impact. If, on the other hand, the US were to demand green mining, then bitcoin miners would either fill deserts with photovoltaics. Or they will relocate to Latin America, Asia, and perhaps even Iran. So Bitcoin is difficult to attack, and the influence of the US is limited.
STANDARD: Regarding the Ethereum merge, critics often said that Proof of Stake threatens decentralisation. But isn't Bitcoin currently also very centralised despite Proof of Work?
CRYPTOROBBY: Indeed, Bitcoin does not have ideal decentralisation. There are theoretically three large mining pools that could take over Bitcoin together. Purely theoretically, in practice I think that is out of the question, Bitcoin is very secure. With Ethereum's Proof of Stake, on the other hand, there is no danger of the currency being centralised directly, but states could indirectly influence the network via regulation of the pools.
Interview with Benjamin Brandtner / DER STANDARD, 16.09.2022 thank you 😇
Find the original interview in German HERE