Beginner's Guide To Ethereum Casper Hardfork: What You Need To Know
The Casper updates mission is straightforward, then: to shift ether from being a PoW coin to a Proof-of-Stake (PoS) coin . As opposed to the PoW consensus protocol, the PoS protocol achieves consensus through stakerssometimes referred to as minters, toowho stake their coins by locking them down in specialized wallets . With these stakers at work, mining will become redundant, meaning the Ethereum network post-Casper will rely on stakers and staking pools instead of miners for its operability. And, like miners, stakers will be rewarded for their service to the network. Minters will receive an annual dividend of ether (collected from network fees), so staking would be a lucrative endeavor for those with enough coins. Naturally, then, the more ETH you stake, the larger your annual dividends will be. For now, Ethereums developers havent arrived at a hard number for the amount of ETH that will be required to stake. What they have confirmed, though, is that the number will likely start out higher before gradually being brought considerably lower. For instance, Ethereum founder Vitalik Buterin has recently thrown around a guesstimate of needing approximately 1,000 ETH to be one of the networks inaugural stakers. He said that number could be dropped down to as low as 10 ETH over time. Whatever the number ends up being, users will still be able to band together and create staking pools, just like there are robust mining pools in the Bitcoin and Ethereum communities today. Youll simply pitch your desired amount of ether in, lock in down with your peers, and rake in the dividends together (to be shared proportionally, of course). Well, the Casper update is certainly a team effort, but its inarguable that top Ethereum researcher Vlad Zamfir has been at the vanguard of the updates Continue reading >>
Ethereum May Upgrade To Proof Of Stake In 2018 Says Vitalik Buterin
Ethereum May Upgrade to Proof of Stake in 2018 Says Vitalik Buterin Ethereums biggest upgrade so far may be ready as early as 2018, Vitalik Buterin, ethereums inventor, said in an interview with one of South Koreas biggest daily. We have a proof of concept for proof of stake. Going from proof of concept to actual adoption would take may be one year, he said. Vitalik further stated that he had to reduce his role in ethereum development as the team was getting bigger and others are making many of the fine and detailed decisions in protocol upgrades such as Metropolis. However, he is still leading efforts regarding the most complicated, and perhaps important, aspect for ethereum, scalability. He says : I am still leading the research effort that is working on proof of stake and sharding, but this team also is now getting bigger. He further estimates the majority of scalability issues will be resolved within 2-5 years with prototypes probably launched by 2018. Buterin says: The various scaling solutions, including sharding, plasma and various state channel systems such as Raiden and Perun, are already quite well thought out, and development has already started. Raiden is the earliest, and its developer preview release is out already. Regulations featured considerably in the interview, especially regarding ICOs, with Buterin stating that regulations might be too early and perhaps ambiguity is beneficial in some aspects as it is clearer to see who is engaging in fraud or criminal behavior. After speaking out against any banning, he says: Imposing very specific regulations is also problematic at this stage, as rules that are not well implemented can often be either easily worked around or even counterproductive, as they encourage further obfuscation. Deliberate ambiguity, so Continue reading >>
Will Proof Of Stake Turn Eth Into The Best Store Of Value Coin? : Ethtrader
In 2018, I expect much of the conversation around Ethereum to center upon Proof of Stake. For those of you who want to learn more about Proof of Stake, this is a decent write-up. A core feature of Proof of Stake will be that miners are replaced by validators. These validators will provide security for the network, by staking their ETH, and will be compensated by receiving a portion of the transaction fees expended on the Ethereum network. If they behave badly, they will be penalized and have their stake slashed. Proof of Stake is anticipated to bring many benefits to the Ethereum network and to ETH token holders, including: Dramatically reducing energy consumption (in contrast to proof of work, which is incredibly energy intensive) Eliminating the miner centralization problem Providing some scaling improvements and supporting the cheaper implementation of private transactions Paving the way for even more advanced scaling solutions Locking-up massive amounts of ETH supply (thus creating relative scarcity in circulating token supply) Allowing ETH to pay what essentially amounts to a dividend (for those with stake who also serve as validators) Imbuing ETH with financial value that is not purely based upon speculation, but also upon income (allowing for discounted cashflow analysis by professional investors) Catching Wall Street's attention (and possibly skyrocketing the price) Here's the rub, in order for Proof of Stake to work, I believe the market must consider ETH to be a store of value token, in addition to being a smart contract utility coin. And I believe that the Foundation and many of the smart people in the Ethereum community already realize this. This "store of value" label is one that the Foundation and many others in the community either avoid, or eschew in so Continue reading >>
Ethereum Switches To Proof Of Stake
Recently, we posted a brief overview of the Ethereum ICO craze . Before that, we had reviewed how blockchains work in general. Today, well delve deeper into the process of mining . In this article, well introduce briefly the concepts of Proof of Work (PoW) and Proof of Stake (PoS). Well talk about why Ethereum, the second largest blockchain, is planning to switch the former for the later and share some forecasts as to the outcomes this decision might lead to. Among his many breakthrough accomplishments, Satoshi, the mysterious founder of Bitcoin, is praised for coming up with a solution to whats known as Byzantine Generals Problem. Suppose theres a war. Theres an army that has a city encircled, but due to exhaustion of resources, the armys generals are undecided whether its smarter to attack or to retreat. Suppose, also, that its the 15th century and the commanders, who are all in camps far apart, have no way of communicating effectively save for sending messengers. How could these generals (lets say there are 20 of them) reach a consensus? Obviously, theyll have to vote. If the majority (at least 51%) decides to move forward with a strategy (of attacking, or of retreating), the whole army will have to get behind their choice. Thats only fair and logical. But then theyll face another problem: how to ensure that no general involved in making a decision votes the wrong way on purpose, just to confuse things? Well, in the world of blockchains, the generals are miners. And choosing a war strategy for them is agreeing on a set of rules, a certain view of the history of digital events that are posted on the network. The way that Bitcoin enables reaching a distributed consensus and punishes, or rather discourages, bad actors for acting dishonestly is by using the Proof of Wor Continue reading >>
When Will Ethereum Mining End?
In August of this year (2017), Vitalik Buterin, creator of Ethereum , released the implementation guide for the first version of Casper. As a hybrid proof-of-stake (PoS)/proof-of-work (PoW) algorithm, Casper v1 is going to decrease (and eventually end) the profitability for Ethereum miners . The release date is estimated to be sometime in 2018 as part of the Constantinople hard fork and theres a lot to learn before this happens: Casper is a PoS algorithm thats projected to be released on the Ethereum network sometime in 2018. Beginning as a hybrid with the current PoW algorithm, the first version of Casper will only use a PoS consensus to validate every 100th block, called checkpoints. Once a checkpoint is validated, theres no way to go back and use a chain without it. Even if 99% of miners support a chain that doesnt include a checkpoint block, all clients in the network will still continue to use the one with the checkpoints. This removes a lot of the power that miners currently have. The Ethereum community hypothesizes that the switch to PoS will help with the scaling issues that the network is currently facing. The algorithm should enable new blocks to be created more quickly while allowing the network to scale more efficiently through sharding. Sharding is a horizontal partitioning of a large database into smaller and more easily managed parts. Beyond that, PoS algorithms also use less energy to run the network, reduce centralization, and make 51% attacks more difficult. With the upcoming hard fork, there could potentially be three forks of Ethereum: And, if youre a miner, you may be thinking, No big deal, Ill just continue to mine and give support to the Ethereum PoW fork. The Ethereum developers have stated that theyll be releasing what they call the difficulty Continue reading >>
Ethereum's Big Switch: The New Roadmap To Proof-of-stake - Coindesk
Ethereum's Big Switch: The New Roadmap to Proof-of-Stake After years of development, ethereum has a new planto update the algorithm that keeps its entire network in sync. Vitalik Buterin, ethereum's creator , recently released a rough implementation guide that reveals the network's developers will first start with a 'hybrid' system that merges bitcoin-style proof-of-work mining with itsmuch-anticipated and still-experimental proof-of-stake system called Casper, created by Buterin. The planeffectively meansethereum will begin alternating between the two systems, so that some transaction blocks (one out of 100) are secured viaproof-of-stake and the rest remain on proof-of-work. Buterin has notably been working on his implementationin parallel with ethereum developer Vlad Zamfir, "cross-pollinating" their ideas. According toKarl Floersch, blockchain engineer for ethereum startup ConsenSysand a coder working with Buterin on Casper's development, the result is that the network is choosing the more conservative of two potential paths forward. "What Vitalik has come up with is a get-it-out-the-door, working version, that works, but might be less theoretically revolutionary than Vlad's." Because Buterin's implementation of Casper can, he thinks, get to production faster, it will be used in the first stage of ethereum's evolution. If implemented, this would be the first time proof-of-stake would be employed on the live ethereum platform, albeit playing a minor role. It also would a largereal-world test of proof-of-stake, enabling the cryptocurrency community to determine whether the proof algorithm is asuperior one, as proponents have argued. To advocates, the goal of this potentially revolutionary change to proof-of-stake is to reduce the electricityethereum requires to reacha Continue reading >>
Consensus - What Proof Of Work Function Does Ethereum Use? - Ethereum Stack Exchange
What proof of work function does Ethereum use? The Ethereum frontier network currently uses a proof of work (PoW) based consensus algorithm. But which specific PoW function does that algorithm use, and why was it chosen? The PoW algorithm used in Frontier and Homestead is called Ethash , and it was created specifically for Ethereum. The primary reason for constructing a new proof of work function instead of using an existing one was to attack the problem of mining centralisation , where a small group of hardware companies or mining operations acquire a disproportionately large amount of power to impact or manipulate the network (should they so choose). The economic forces within existing networks (such as Bitcoin and Litecoin) make centralisation of mining efforts highly profitable, in part due to the possibility for producing ASICs , specialised chips specifically designed to outperform standardised computer hardware by many orders of magnitude in hashing performance. Other factors that promote mining centralisation, such as handling of orphaned blocks, are tackled separately within the Ethereum protocol. By specifically designing an "ASIC-resistant" PoW algorithm, the Ethereum team hopes to reduce economic incentives for mining centralisation in Ethereum, at least until a secure PoS algorithm can be designed and deployed . The way that Ethash aims to provide a PoW algorithm for which commodity hardware is already highly optimised (and hence creation of an ASIC, which is expensive, will yield very little advantage over simply using the latest commodity hardware) is by emphasising a property called memory hardness . Memory hardness essentially means that your performance is limited by how fast your computer can move data around in memory rather than by how fast it can Continue reading >>
Proof Of Stake Is Coming, And Will Be A Game Changer
Proof of Stake Is Coming, and Will Be a Game Changer Join our community of 10 000 traders on Hacked.com for just $39 per month. Proof of Work mining (the protocol underpinning Bitcoin and many others) uses as much energy as the nation Denmark. Its a costly and lengthy process, and with the user base growing traditional blockchains are struggling. This is because every single transaction needs to be mined by powerful computers solving complex mathematical problems. Its a process that ensures the security of the network, preventing double spends and other malicious actions. Whilst effective, the energy inefficiency of this process is truly staggering. And thats not all. With each transaction needing a lengthy confirmation process, the blockchain cannot scale easily as more and more users join the network. Bitcoin transactions are now unbearably slow and expensive, with long backlogs of transactions waiting their turn. Ethereum too is suffering from the same issue. Although the network can currently handle around fifteen transactions per second, significantly more than Bitcoin, we need only look at the recent Cryptokitties mania to see the crippling effect of high network load. Backlogs of transactions quickly built up and transaction prices skyrocketed as users fought to get included in the next block.With the severe limitations proof of work seen, it seems impossible for real-world use cases to succeed. VISA and other non-blockchains handle thousands of transactions per second, and if the many projects emerging in the crypto space are to compete, something needs to change. Vitalik Buterin, mastermind of the Ethereum system, aims to introduce what is known as a Proof of Stake this year. The upgrade to the network is known as Casper, and it promises to be a game changer. Continue reading >>
Proof Of Stake - Bitcoin Wiki
Proof of Stake is a proposed alternative to Proof of Work . Like proof of work, proof of stake attempts to provide consensus and doublespend prevention (see "main" bitcointalk thread , and a Bounty Thread ). Because creating forks is costless when you aren't burning an external resource Proof of Stake alone is considered to an unworkable consensus mechanism.  It was probably first proposed here by a member named QuantumMechanic . With Proof of Work, the probability of mining a block depends on the work done by the miner (e.g. CPU/GPU cycles spent checking hashes). With Proof of Stake, the resource that's compared is the amount of Bitcoin a miner holds - someone holding 1% of the Bitcoin can mine 1% of the "Proof of Stake blocks". Some argue that methods based on Proof of Work alone might lead to a low network security in a cryptocurrency with block incentives that decline over time (like bitcoin) due to Tragedy of the Commons , and Proof of Stake is one way of changing the miner's incentives in favor of higher network security. A proof-of-stake system might provide increased protection from a malicious attack on the network. Additional protection comes from two sources: Executing an attack would be much more expensive. Reduced incentives for attack. The attacker would need to own a near majority of all bitcoin. Therefore, the attacker suffer severely from his own attack. When block rewards are produced through txn fees, a proof of stake system would result in lower equilibrium txn fees. Lower long-run fees would increase the competitiveness of bitcoin relative to alternative payments systems. Intuitively reduced fees are due to vast reductions in the scale of wastage of resources. If a single entity (hereafter a monopolist) took control of the majority of txn verifi Continue reading >>
Proof Of Stake Faq Ethereum/wiki Wiki Github
See A Proof of Stake Design Philosophy for a more long-form argument. No need to consume large quantities of electricity in order to secure a blockchain (eg. it's estimated that both Bitcoin and Ethereum burn over $1 million worth of electricity and hardware costs per day as part of their consensus mechanism). Because of the lack of high electricity consumption, there is not as much need to issue as many new coins in order to motivate participants to keep participating in the network. It may theoretically even be possible to have negative net issuance, where a portion of transaction fees is "burned" and so the supply goes down over time. Proof of stake opens the door to a wider array of techniques that use game-theoretic mechanism design in order to better discourage centralized cartels from forming and, if they do form, from acting in ways that are harmful to the network (eg. like selfish mining in proof of work). Reduced centralization risks, as economies of scale are much less of an issue. $10 million of coins will get you exactly 10 times higher returns than $1 million of coins, without any additional disproportionate gains because at the higher level you can afford better mass-production equipment. Ability to use economic penalties to make various forms of 51% attacks vastly more expensive to carry out than proof of work - to paraphrase Vlad Zamfir, "it's as though your ASIC farm burned down if you participated in a 51% attack". How does proof of stake fit into traditional Byzantine fault tolerance research? There are several fundamental results from Byzantine fault tolerance research that apply to all consensus algorithms, including traditional consensus algorithms like PBFT but also any proof of stake algorithm and, with the appropriate mathematical modeling, pr Continue reading >>
When Will Ethereum Switch To Proof Of Stake?
Leonid Logvinov , Blockchain developer at NeuFund In an update to Roland Kofler and John Whelan s answers, development of Ethereums proof of stake protocol is a year behind schedule due to resources diverted to the The DAO hack of June 2016 . As Roland and John rightly point out, proof-of-work mining is getting harder and harder with block times increasing exponentially as we approach the ice age. This was designed to force a switch to proof-of-stake, but given the delay, the Ethereum foundation has raised the possibility of delaying the ice age as part of the Metropolis fork in late 2017 . This would reduce pressure to switch to proof-of-stake, making a switch in 2017 less likely. As recently as March 18th 2017, Vitalik has provided a conservative estimate of 15 months before launch , giving us an expected date of June 2018. Continue reading >>
Ethereum's Casper Is Almost Here, Here's What You Need To Know - Influencive
For those unfamiliar with blockchain platform Ethereum , it currently runs on Proof of Work (PoW) consensus. The result is a lot of hardware and electricity is needed to confirm a transaction through a process called mining, or searching for the next block on the chain (hence blockchain.) Many are still unaware of the future of Ethereum,Casper, the friendly ghost. No thats not what it is, Casper is the new consensus strategy that Ethereum will run on once it is implemented. Casper uses the Proof of Stake (PoS) algorithm, which requires much less computational power to find the correct block. Proof of Stake differs in a way that nodes place a stake, similar to a security deposit to validate transactions. If they bet with the consensus they are likely to be rewarded, while betting against the consensus can result in a loss. The amount of influence that any given coin holder has is proportional to the amount of coins they hold (stake). Now after all that, you may ask why is Casper so important? Well, currently the Ethereum network can handle 10 to 20 transactions (txns) a second, which means the network can get bogged down quite easily, especially when an Initial Coin Offering (ICO) is going on. Anyone who was trying to send Ether during Bancors ICO back in June noticed that lots of transactions were not getting through due to the sheer volume of people trying to send Ether for the ICO. Vitalik Buterin (Co-founder of Ethereum) has spoken about how the network needs improvement. Here is a quote from him: the applications are thereall are on backburner now precisely because scalability is not there. I personally have cut down evangelism precisely because I see that the main bottleneck is now not interest, but tech. Switching to Casper will allow Ethereum to scale in order t Continue reading >>
Ethereums Switch To Proof Of Stake Better Than Proof Of Work?
By UseTheBitcoin in Cryptocurrency News Guides Home If youre at least interested in the cryptocurrency space, youve probably heard of Ethereum. Its currently the second largest coin by market cap, primarily because so many other tokens run on Ethereum, and partly because the development team is very talented. Either way, this post is about the switch from POW to POS. Well, POW is currently used by most cryptocurrencies including Bitcoin, Ethereum (for now) and Litecoin. If a coin is minable, that means its utilizing a POW system. Miners use their GPUs or ASICs to solve cryptographic hash functions which verify the blockchain. GPUs primarily designed for gaming like the RX 580 are now being employed by miners. Their GPUs are rapidly guessing and checking different solutions to a next to impossible math problem. When they successfully solve the equation, the ledger (blockchain) is updated and the miner receives a block reward in the form of a token and/or transaction fees. This is called Proof-of-Work because miners are doing lots of work in the form of processing mathematical equations with their mining hardware. Without miners, many networks wouldnt exist. Miners pay for electricity in exchange for tokens. What is Proof of Stake and How its different Proof-of-Stake is a bit different. Previously miners proved how fast they could verify the network; now, ETH holders will show how much they own by running something called a master node . When you create a master node, you have to lock up a certain amount of ETH to prove you own it. Rewards are distributed based on how much you have locked away and how long its locked away for. Instead of 1,000 miners verifying the network for example, there might be around 10,000 wallets holding Ethereum through Proof-of-Stake. With POS, Continue reading >>
First Impressions Of Ethereums Casperproof Of Stake(pos)
Vitalik Buterin and Virgil Griffith have introduced a proof of stake-based finality system capable of overlaying an existing proof of work (PoW) blockchain. In their paper , entitled Casper the Friendly Finality Gadget, Buterin and Griffith explain that the first version of Casper (within Ethereum) could take on the form of a hybrid PoW/PoS system. The first available release of the alpha Casper Friendly Finality Gadget (FFG) testnet, built on pyethereum, achieves this. This hybrid PoW/PoS vision, albeit with only 14 listed nodes at the time of writing, can be observed on the following Ethereum Network Status Site . Installing Casper FFG on Ubuntu 16.04LTS Thankfully, the process of installing Casper FFG on Ubuntu as documented here  is relatively straight forward. This succinct installation process is thanks to the docker approach provided by Karl Floersch . Participating in the validation PoSprocess At present, my most significant hurdle to running a validating Casper FFG testnet node is not brought about by the installation process or commands. It is brought about by the fact that a validating Casper FFG node, on the testnet, must provide a minimum deposit of 1, 500 Casper FFG testnet ETH in order to participate in the validation process. As we mentioned previously, Casper FFG is a hybrid PoW/PoS system and therefore the Casper FFG node is able to be run in mining mode. The following gist contains a list of commands for mining Casper FFG testnet ETH using Ubuntu 16.04LTS. The following gist contains a list of commands for checking Casper FFG testnet ETH account balance (during/after mining). Of course, whilst mining is an option, it would be ideal if participants willing to try out the alpha Casper FFG testnet could have immediate access to the required Continue reading >>
When A Proof Of Stake Comes Out, Will Ethereum Go Up In Price?
When a proof of stake comes out, will Ethereum go up in price? Originally Answered: How will proof of stake affect the price of ETH? I don't think the price will rise due to the restricted supply of coins. I think the price will rise due to the platform reaching another major milestone. It is pretty difficult to think of a scenario where a well functioning POS system doesn't affect the price positively. The last milestone, Homestead, brought a significant rise in price as Ethereum transitioned out of early testing phase and the team proved that they could build a reliable platform. With PoS there will be less of a need to sell for covering electricity/hardware costs. Ether earned from staking will probably be added to the stake rather than sold. As mining is expensive as mentioned above, you cant blame miners for selling the coins they earn which causes price volatility. The reason why a PoS would give you price stability is because it gives the person more incentive to keep the coin than to sell. Ethereum is also designed to actually be able to LOSE ETH coins after PoS. Meaning instead of the supply constantly appreciating, it could depreciate, hence driving value up even more. PoS has always been a stated goal of the Ethereum Foundation and would be a major accomplishment. No one has ever been able to pull off a decent implementation of PoS before which avoids all the pitfalls and is actually an improvement over PoW. As PoW uses massive amounts of computing power, it also comes with a huge toll on the electricity bill, not to mention the deterioration of your mining computer. With PoS, you would be able to stake using something as simple as a Raspberry Pi (USD 35), which only uses a very small amount of electricity would enable you to stake more coins compared to a s Continue reading >>