Proof Of Work Vs Proof Of Stake: Basic Mining Guide
Proof of Work vs Proof of Stake: Basic Mining Guide Angel Investors, Startups & Blockchain developers... Recently you might have heard about the idea to move from an Ethereum consensus based on the Proof of Work (PoW) system to one based on the so-called Proof of Stake. In this article, I will explain to you the main differences between Proof of Work vs Proof of Stake and I will provide you a definition of mining, or the process new digital currencies are released through the network. Also, what will change regarding mining techniques if the Ethereum community decides to do the transition from work to stake? This article wants to be a basic guide to understanding the problem above. First of all, lets start with basic definitions. Proof of work is a protocol that has the main goal of deterring cyber-attacks such as a distributed denial-of-service attack (DDoS) which has the purpose of exhausting the resources of a computer system by sending multiple fake requests. The Proof of work concept existed even before bitcoin , but Satoshi Nakamoto applied this technique to his/her we still dont know who Nakamoto really is digital currency revolutionizing the way traditional transactions are set. In fact, PoW idea was originally published by Cynthia Dwork and Moni Naor back in 1993, but the term proof of work was coined by Markus Jakobsson and Ari Juels in a document published in 1999. But, returning to date, Proof of work is maybe the biggest idea behind the Nakamotos Bitcoin white paper published back in 2008 because it allows trustless and distributed consensus. Whats trustless and distributed consensus? A trustless and distributed consensus system means that if you want to send and/or receive money from someone you dont need to trust in third-party services. When you use tra Continue reading >>
How Ethereum's Casper Protocol Will Address Problems With Proof Of Stake
How Ethereum's Casper Protocol Will Address Problems With Proof Of Stake Bitcoin and Ethereum both currently operate under a Proof of Work protocol. Ethereum is moving from Proof of Work towards Proof of Stake under its new Casper protocol. Despite its many benefits, the drawbacks of Proof of Stake have prevented its widespread adoption. Casper aims to solve Proof of Stake's drawbacks, resulting in an improvement over existing Proof of Work and Proof of Stake protocols. The updated protocol improves the long term outlook of Ethereum's valuation. An overarching problem that cryptocurrencies must address is called the Byzantine General's Problem . The Byzantine General's Problem essentially simplifies down to: How do you prevent data from being corrupted or falsified in a network where there are nodes that have economic incentive to lie about the data? In application to cryptocurrency, the problem boils down to preventing attackers from lying about a coin's ledger, given the economic incentive of doing so. We need a way to form consensus on the ledger because anyone can create a block, while we only want a unique chain, so we want a way to decide which block to trust. The two main schools of thought to solving the Byzantine General's Problem are Proof of Work (PoW) and Proof of Stake (PoS). Explicitly, a "proof of work" is a piece of data which is difficult (costly, time-consuming) to produce but easy for others to verify and which satisfies certain requirements. Producing a proof of work can be a random process with low probability so that a lot of trial and error is required on average before a valid proof of work is generated. Currently Bitcoin, Ethereum, and the vast majority of other cryptocurrencies utilize some form of proof of work. PoW (referring to the protocol Continue reading >>
Mitigating The Risk Of Ethereum Switching To Pos In 2018
Mitigating the risk of Ethereum switching to POS in 2018 As an educated miner, what are possible mitigating actions I can do to secure my mining investment given that there is a high probability that Ethereum will push through with the switch to POS in 2018? I understand that I can always shift to another coin then, but what i'm really asking is, are there any PROACTIVE actions I can do TODAY that will reduce the risk of not being able to ROI on my mining investment? Byteball I T J U S T W O R K S . Sending Crypto to Email - Risk-Free Conditional Smart Payments - ICO Platform with KYC One thing i can think of is to sell your mining rig prior to the switch to POS. It will be easy to sell the components because these are all used as regular components of a normal computer. The graphics cards will be easier to sell because there is a demand from gamers who use these to play computer video games. Looking forward to read ideas/strategies from other people as well. Quote from: m.vina on November 15, 2017, 07:00:17 AM As an educated miner, what are possible mitigating actions I can do to secure my mining investment given that there is a high probability that Ethereum will push through with the switch to POS in 2018? I understand that I can always shift to another coin then, but what i'm really asking is, are there any PROACTIVE actions I can do TODAY that will reduce the risk of not being able to ROI on my mining investment? Dude, ETH is not the only profitable coin around, and don't worry, every now and the new coins are always born, in 2017 alone there are new born coins that is profitable than ETH, Ex. ETN and PIRL. Aside from the worst case scenario that could happen, you may do comments above Quote from: m.vina on November 15, 2017, 07:00:17 AM As an educated miner, what 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 >>
Ethereum's Proof Of Stake Casper Testnet Nears Launch
One of the biggest upgrade in ethereum, and perhaps in the entire ecosystem, might be closer to implementation than previously thought, withLane Rettig, a researcher at the Ethereum Foundation, stating : Casper FFG testnet is coming. Weve got a three-node network working with two validators. Still a few bugs to work out. Whitepapers are cool and all but seeing this come to life is amazing. Casper Friendly Finality Gadget (FFG) is a hybrid Proof of Stake (PoS) and Proof of Work (PoW) implementation developed by Vitalik Buterin, ethereums inventor, and others. This implementation is apparently sufficiently advanced to the extent it could even be incorporated in the next ethereum upgrade, Constantinople Metropolis. According to Ethnews, Buterin said : Theoretically, Casper may well be at the stage where we may actually just try doing it for the next fork, even if that sounds ambitious. There is no estimated date for the second Metropolis fork as far as we are aware. Initially, the intention was to have just one Metropolis upgrade, but some aspects were taking far too long, while much else had been finalized. Developers therefore split it into Byzantium and Constantinople, with Byzantium going through just a few weeks ago. Constantinople is now expected next and might potentially incorporate Casper. The Casper testnet is, as the name says, an environment where they can test the first version of PoS. That means the code is not finalized, but has taken form rather than being at the theoretical design stage. The purpose of the testnet is to firstly ensure security and secondly to refine it fully as coders see how it works in a virtual lab environment. It is the last stage of any upgrade, before it goes to main-net, and indicates a live launch might be just months away. When e Continue reading >>
Ethereum Launches Casper Testnet, Paving The Way For Proof-of-stake
Ethereum Launches Casper Testnet, Paving the Way for Proof-of-Stake Ethereum developers have launched an alpha test network (testnet) for Casper, paving the way for the cryptocurrency to eventually transition to a proof-of-stake (PoS) consensus algorithm. Like bitcoin, ethereum currently operates on a proof-of-work (PoW) consensus algorithm, meaning that the network is secured and new currency units are issued through mining, whereby participants solve cryptographic puzzles to validate transactions and create new blocks. However, PoW has attracted criticism over the years, both for its tendency to centralize mining hardware into a few pools and for the amount of electricity it consumes. Ethereum aims to address these problems by transitioning to Casper , a proof-of-stake (PoS) consensus algorithm. Under Casper, participants can become validators by locking up or staking ether. Validators will take turns proposing and voting on blocks, and both the weight of their votes and the size of their rewards will hinge on the size of their stakes. According to developers, moving to Casper will greatly reduce the amount of electricity wasted through PoW mining. In addition to limiting its environmental impact, PoS will allow ethereum to dramatically reduce its rate of currency inflation since validators will have much lower overhead and will thus require smaller rewards to incentivize them to continue to serve as validators. Moreover, PoS will also reduce the incentive that validators have to centralize their influence. With decreased centralization comes increased security and, importantly, resistance to dreaded 51 percent attacks. Ethereum is not the first project to attempt to integrate a PoS consensus algorithm. However, most previous PoS implementations have been criticized Continue reading >>
What Is Ethereum Casper Protocol? Crash Course
What is Ethereum Casper Protocol? Crash Course Angel Investors, Startups & Blockchain developers... If you are interested in Ethereum or Cryptocurrency in general, then you must be aware of the terms proof-of-stake and Ethereum Casper. There is no running away from these terms, they are everywhere. Now because there is so much data out there, anyone interested in the topic may go through paralysis via analysis. So, in this guide, we present to you the definitive guide to Casper and how it will change Ethereum forever. What is Ethereum Casper Protocol? Crash Course Most cryptocurrencies including Bitcoin run on proof-of-work. Proof-of-work as a process has the following steps to it: The miners solve cryptographic puzzles to mine a block to add to the blockchain . This process requires an immense amount of energy and computational usage. The puzzles have been designed in a way which makes it hard and taxing on the system. When a miner solves the puzzle, they present their block to the network for verification. Verifying whether the block belongs to the chain or not is an extremely simple process. That, in essence, is what the proof-of-work system is. Solving the puzzle is difficult but checking whether the solution is actually correct or not is easy. This is the system that Bitcoin and Ethereum (till now) have been using. However, there are some fundamental flaws in the system. As it turns out, there are quite a few problems with proof-of-work. First and foremost, proof of work is an extremely inefficient process because of the sheer amount of power and energy that it eats up. People and organizations that can afford faster and more powerful ASICs usually have a better chance of mining than the others. As a result of this, bitcoin isnt as decentralized as it wants to be. Continue reading >>
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 >>
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 Will Eth Switch To Pos? Mining Is Over Soon?
Casper and ice age are two different things, absolutely no connection at all. Casper is on an alpha testnet, not on THE testnet. If everything goes ok, then comes the testnet, after that, the mainnet hybrid mining/staking and after all of this comes the real casper launch. Many milestone ahead. Edit: no connection at all is a bit overstatement, but the ice age was already kicked in months ago, and postponed with the latest fork. Continue reading >>
When Is Ethereum Expected To Switch To Pos? : Ethereum
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4 Answers - When Will Ethereum Change From Pow To Pos?
When will Ethereum change from POW to POS? So Vitalik, one of the founders of Ethereum, has been spending a lot of time talking about this on reddit and gitter.im . Based on his conversation, it seems that there will be a soft launch of POS in August or September (ie a hybrid between POW and POS) with the full transition happening by EOY. Vitalik has already created the POS repository to begin pushing code to prod: In addition, there is a timer built into the Ethereum code that effectively doubles the complexity of the hashing algorithm starting later this month. This will making mining much more difficult and an addition incentive to move to POW. By 2018, you can expect Ethereum to be POS. Originally Answered: Why would Ethereum change from POW to POS? Proof of Work (POW) is the current standard mode of operation set by most cryptocurrencies following the lead of Bitcoin. In this method physical hardware with high computing power is used to run an algorithmic program to get rewards. The net effect of this is that costly hardware run programs while consuming electric power and CPU cycles for unproductive work. Te network users running these programs for rewards are called miners. Proof of Stake (POS) seeks to switch from the mining process to a blockchain network supported only by users who validate transactions with no mining. This is a green and efficient method to run the network. Continue reading >>
Lightning Network For Ethereum? Eth Surges As Casper Approaches
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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 >>
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 >>