Binance crypto exchange CEO Changpeng Zhao says that while the transition of Ethereum (ETH) to the proof-of-stake (PoS) consensus mechanism is progress in the right direction, it is not “earth-moving.”
Zhao says in a new Crypto Banter interview that the revolutionary change that Ethereum could make is lowering transaction costs and enhancing scalability through sharding.
“I think it’s [Ethereum transitioning to PoS] very important. But I don’t think it’s a fundamental change. There are other blockchains that are PoS already. There are other blockchains that are staking, deflationary…
I think all of this is important, but it’s not like earth-moving. But it’s definitely progress in the right direction.
I think what will be earth-moving is when the fees drop, when the sharding kicks in and when they can go live with sharding. That’s a much harder problem to solve.”
Sharding is the process of splitting Ethereum’s infrastructure into smaller pieces called shards in an effort to distribute the load and increase the blockchain’s scalability.
The Binance CEO is also commenting on proof-of-work (PoW) consensus mechanisms which Bitcoin (BTC) currently uses. According to Zhao, there’s a lot of “misinformation and misconceptions” surrounding PoW models.
“I think proof of work is fine. I think this whole Bitcoin is not energy-efficient, it’s using too much energy… it’s just complete misinformation and misconceptions.
It’s just because we can measure the amount of energy that Bitcoin uses. But if you try to measure the amounts of energy banks use, the buildings the downtowns to manage a trillion-dollar asset, there’s no other more efficient way.
The banks spend way more energy on electricity alone. And then they have to have all these buildings, all these trucks moving gold or the security guards. And they hire all these people. The expense they use to manage those assets are much, much higher than Bitcoin’s.”
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