Last week the Community Ethereum Development Conference took place, and Ethereum co-founder Vitalik Buterin reported on Casper’s progress and the Proof of Stake (PoS) consensus protocol to drive the future of Ethereum.
Ethereum is the most popular platform for the introduction of new tokens by ICOs and has taken a leading role in the expansion and maturation of the crypto industry. Etherscan has more than 81,000 ERC-20 token contracts, many of which are associated with Ethereum. ICOs based on the Ethereum Blockchain have already collected nearly seven billion dollars this year.
Proof of work is too much work
Like Bitcoin, Ethereum’s blockchain is based on a Proof of Work (PoW) consensus protocol that has proven incredibly effective at securing the network and maintaining the distributed ledger. Proof of Work is best known for its energy-intensive mining.
Bitcoin Code is too much work
This is also the criticism of mining, as the PoW consumes too much electricity, Bitcoin Code is onlinebetrug not environmentally friendly, and could theoretically endanger decentralization. Buterin and other blockchain developers have long expressed concerns about PoW’s energy consumption and its limitations as a scalable protocol. For example, a single unit with sufficient computer power could disproportionately control the blockchain.
Casper – High Staking Entry Barrier
In January, Ethereum introduced Casper’s Testnet, and crypto investors responded by seeing the price of ether exceed $1,000 for the first time. Last month, more details became known about the algorithm, formally known as Casper FFG, which will drive the network’s transition to a PoS (Proof of Stake) model.
However, the entrance fee is quite high – according to Buterin, users need 1,500 ETH to participate in Casper Staking, which is over $1.1 million. The net requires such a high admission price, as it can only accommodate a relatively small number of nodes. However, it is rumored that Casper can guarantee a higher number of nodes after Sharding has been implemented.
The user’s initial ether amount is stored in an intelligent contract, and the PoS rewards are paid out accordingly. The higher the initial amount, the more the user will be paid for his effort. Based on an initial investment of 10 million ether, Buterin estimates that a node that is continuously online could generate a return of up to five percent. According to Buterin, users would only need to be online a third of the time to achieve a positive return.
Interestingly, nodes are rewarded with a PoS concept for connectivity, but also punished for their inactivity. In addition, the Casper protocol penalizes users for things such as staking pools. As the development of the network progresses, the entry barrier of 1,500 ethers is likely to decrease.