The new code for Ethereum which will change the way that the blockchain network reaches consensus is up and ready for review from the Ethereum community. The new proposed improvement in Ethereum’s protocol EIP 1011 is being dubbed as Hybrid Casper Friendly Finality Gadget is a change which has been in the works for a long time. Aiming to reduce the resource exhaustive aspect of the mining process on the Ethereum blockchain in a bid to make the whole process greener is going to focus on Proof of Stake rather than the current Proof of Work method to reach consensus on the Ethereum blockchain network.
What is Proof of Stake?
The proof of stake method is a different means of validating transactions to reach a consensus on the distributed ledger. Very much like the proof of work which is currently being employed, proof of stake is also an algorithm but the process of reaching the goal of consensus on the Ethereum blockchain network in the proposed improvement is going to be very different.
**The idea **for making use of a different process to reach consensus was first seen being suggested back in 2011 but the first application of proof of stake was seen by Peercoin a year later in 2012. The proof of work is when the miners participating in the verification process are rewarded by the Ethereum blockchain network for solving mathematical problems with the goal of validating the transactions on the network and creating the new blocks on the blockchain. With the proof of stake method that’s going to come with the Casper upgrade, those who create new blocks on the blockchain network will be chosen in a more determined manner which will depend on the wealth. Hence called the proof of stake.
This way there is no block reward in the proof of stake method. The miners will be taking the transaction fees instead.
The Need For The Switch
The reason why the Ethereum blockchain network wants to make the switch to the proof of stake method through Casper is because in the proof of work method, miners are making use of a lot of energy. That means the electricity being expended has to be paid for in fiat currency and that is affecting the drive for Ethereum’s rise in value.
With the proof of stake method, a greener manner in which the consensus can be reached is the goal that the Ethereum blockchain network wants to accomplish.
Bottom Line
The Casper upgrade which will introduce the proof of stake protocol is not going to be compatible with the current source code that Ethereum is based on. This is something that the users on the Ethereum blockchain network need to understand. The change is now up for review for everyone to see. The upgrade, when implemented, will result from a hard fork some point in the future.
The real impact that the Casper upgrade to the Ethereum blockchain network cannot be known unless it is actually implemented to the main blockchain network. Until then, it will be a constant matter of debate as to how the change will affect the Ethereum ecosystem.
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Great article. By locking the supply, casper will bring value to Ethereum.