Monday, 24 June 2019

What will happen if Ethereum moves to the Proof of Stake?

In order to answer your question let me explain you what Proof of Stake is:
Proof of Stake is a slightly different way to validate a transaction - A miner uses its funds to enter a poll and deterministicly gets picked to validate a block without the use of any computational power.

Unlike the Proof of Work protocol, where the algorithm rewards miners who solve mathematical problems with the goal of creating new blocks, Proof of Stake has no block rewards and miners get commissioned only by transaction fees - That’s why they are called forgers, instead.

Why turn to Proof of Stake?

The Ethereum community along with its creator, Vitalik Buterin, are planning to do a hard fork to switch to POS protocol.

One of the main reasons they want to do it is because the miners require a lot of energy - Bitcoin transaction may consume as much electricity as an major european country in 2020.

Concerns come from the development part because most of energy costs are paid with fiat damaging Ether’s value, therefore they want to switch to the POS for a cheaper and greener distributed form of consensus.


Users can become forgers by locking their funds through a smart contract in order to be randomly selected to become a validator of a certain block with a reward ranging somewhere around 2–15%.

Buterin suggested that there will be no imposed limit on the number of forgers, but it will cut the interest rate if there are too many.

Is POS safer than POW?

In a Proof of Work protocol is not profitable to attack the system costing a bad actor more than he could actually steal.

To make POS bulletproof Buterin, created the Casper protocol, designing an algorithm to follow certain rules under which a bad validator might lose its whole deposit in an attempt of creating an invalid block.

“Economic finality is accomplished in Casper by requiring validators to submit deposits to participate, and taking away their deposits if the protocol determines that they acted in some way that violates some set of rules (‘slashing conditions’).”


Besides the fact that the new POS protocol could cut the energy costs, it could become a safer network than POW, because a supposed bad actor would have to buy 51% of the total issued Ethers to launch an attack.

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