Bitcoin Needs to Upgrade if it Wants to Stay Legal: Charles Hoskinson

Charles Hoskinson – CEO of Input Output Global (IOG) and co-founder of Cardano – delivered a warning to the Bitcoin community on Thursday.

According to the White House’s latest report, bureaucrats are recommending a potential Bitcoin mining ban to combat excess energy use. As such, Hoskinson suggested that Bitcoin transition to a new consensus algorithm stay within U.S. borders. 

Climate and Energy Implications of Crypto-Assets in the United States https://t.co/SpHAyvnOwu

— Charles Hoskinson (@IOHK_Charles) September 8, 2022

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• The CEO examined page 7 of the White House’s report, titled “Climate and Energy Implications of Crypto-Assets in the United States.”
• The page includes a recommendation that the administration “minimize GHG emissions [and] environmental justice impacts from crypto assets.” For one, it suggests setting environmental performance standards for “the effective design development, and use of responsible crypto asset technologies.”

• “The EPA and the DOE are going to start talking to crypto companies to basically tell them to change the way their cryptocurrencies work,” said Hoskinson, interpreting the line. 

• The report then suggested that Congress could establish legislation to “limit or eliminate the use of high energy intensity consensus mechanisms for crypto asset mining,” should environmental standards prove ineffective.
• “In other words, Bitcoin should be banned,” concluded Hoskinson. The CEO argued that the United States government frequently takes such action, soft banning certain industries with overburdensome regulation from bureaucrats. 
• Hoskinson said that he anticipated such action, and had already developed a new consensus mechanism in response. This mechanism is called “proof of useful work,” which helps proof of work chains use energy more efficiently. 

• “Then, your consensus mechanism does more than just secure cryptocurrency,” he explained. “It also provides a large distributed computer for hire.”

• The developer specifically recommended that Bitcoiners consider implementing Ofelimous, a proof of useful work protocol created by Cardano. This, he posits, would let Bitcoin miners be held to the same legal standards as large data centers. 
• Nevertheless, Hoskinson was doubtful that this would actually happen given the “religion” of Bitcoin maximalism. He also stood by his position that proof of stake is a “vastly superior” consensus mechanism to proof of work.