To date, the protocol has been embraced by several projects peercoin, NXT and others but ethereum's transition would be unique in that it would essentially switch protocols mid-flight, so to speak. As a result, it's faced heavy criticism from those who long have alleged that both PoS, and ethereum's implementation, might not work. The idea has been met its fair share of skepticism, partly because it's taking a long time to implement a version that developers agree is secure.
Yet, against this backdrop, ethereum developers have continued working on an alternative, arguing that they're making headway. Work has gone through many iterations and materialized in an idea known as 'Casper', after the movie ghost, which ethereum creator Vitalik Buterin has described as "consensus by bet".
Buterin told CoinDesk that the development process is now exploring how to incentivize the functioning of ethereum in a wholly new way, stating:. While Buterin's description may sound complex, what the statement essentially boils down to is that ethereum is still seeking to get its incentive scheme for its proof-of-work alternative right.
As far back as September, both Buterin and fellow developer Vlad Zamfir were working on competing implementations of the idea. Both are essentially betting that the cost of buying physical miners as well as their competition can be replicated virtually, given the right conditions.
Now, after years of research, Buterin said, he's "quite confident on the general principle" though "details need to be worked out. The team often holds public discussions on its research, and has posted three open-source simulations so far the latest, posted in August, is here , which show how the protocol works and that it can converge on one history. Recently, Buterin offered a research update covering the protocol, while Zamfir has been running a blog series on the history of his thought process.
To recap, proof of work, used by both bitcoin and ethereum right now, requires a network of powerful computers to validate transactions, and proof of stake is another means to this end. The goal of both is the same: for the nodes in the network to come to agreement on a correct transaction history. PoS hasn't been easy to implement, seeing several stages of development since , when Buterin stated that ethereum would " likely " switch from PoW.
The first of these stages, which they now call "naive PoS", suffers from what has been called the 'nothing-at-stake' problem. What separates Casper and other more recent versions from traditional PoS, is that it punishes participants who don't play by the rules.
Buterin described it with a rough analogy: imagine people sitting around a circular table. One person has a bundle of papers, each with a different transaction history. The first participant picks up a pen and signs one, then passes it onto the next person, who makes a similar choice. They come down to "crypto-economics," a word often heard in the ethereum community to describe what could be an emerging field of study, focusing on how cryptography can be used to help steer participants in a certain direction with the right incentives.
It drives miners to act honestly by paying them bitcoin. Buterin and others are trying to get players to continue to play by the rules without the miners. For it to work, the validators need to behave politely, Buterin said. But, there are some situations where it's more difficult to concoct the right incentives.
Another is that the validators should be barred from cheating competing validators out of their money a problem called "bounding the griefing factor". All in all, the way Vitalik sees it, there are three steps left: finalize the algorithm, review it and build a testnet, and then implement it across all seven of the ethereum clients. Until then, he and many others consider it 'vaporware'.
Purple light image via Shutterstock. The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group , which invests in cryptocurrencies and blockchain startups.
As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights , which vest over a multi-year period. But — Solidity is the first successful smart contract language, and Ethereum is the first successful smart contract platform. I think this is precisely because Ethereum has been happy to approximate stuff until it works well enough.
This results in some hilarious disasters, both on a small scale — the first Ethereum smart contracts exploring the field of incompetent fraud — and a large scale — The DAO disaster. And the disasters continue. But none that are bad enough to kill it. Ethereum has the faith of its community — much more so than Bitcoin has — because so far the Ethereum developers have kept pulling the rabbits out of the hat.
It shook it a bit, producing Ethereum Classic. The market treats centrally administered ICO tokens, and centrally-controlled cryptocurrencies like Ripple XRP , as the same class of object as Bitcoins or ether. The market wants what it wants, not what ideologues want it to want. So Casper just has to be good enough for the system to keep going. We left decentralisation behind long ago. Your subscriptions keep this site going.
Sign up today! Thats…an unusually positive article David! Your email address will not be published. Notify me of follow-up comments by email. Notify me of new posts by email. This site uses Akismet to reduce spam. Learn how your comment data is processed. Skip to content Proof-of-work cryptocurrency mining is bad, stupid and damaging. Thinking about how to reduce CO2 emissions from a widespread Bitcoin implementation — halfin halfin January 27, Proof-of-work was a kludgy hack. Ethereum and proof-of-stake Vitalik Buterin has been talking about proof-of-stake since This is okay as long as you can approximate your way to full functionality.
Ethereum as a centralised system Ethereum has the faith of its community — much more so than Bitcoin has — because so far the Ethereum developers have kept pulling the rabbits out of the hat. Next Article From Sia: an incendiary post on the state of cryptocurrency mining in
This question is about PoW vs. PoS so I'm keeping the answer very general. Ethereum is going to use Casper, where the stake of malicious validators is going to get partially slashed, for example if they sign two competing blocks with too high a probability. The goal of a consensus algorithm in a public blockchain network is to let many different users agree on the current state of the blockchain even though they don't trust each other or any central authority.
This is a challenging problem, and until the Bitcoin network was launched, it had remained unsolved. Bitcoin's solution was to use something called Proof of Work or "mining", or "hashing" , where participating users worked to solve difficult mathematical problems, and then published the solutions. Because it takes real-world resources like computers and electricity to find these solutions, there's no way to "cheat" and pretend that you represent a bigger portion of the mining power on the network than you actually do.
As a result, PoW algorithms are able to use the number and difficulty of solutions being found to measure how much of the network agrees on the current state of the blockchain. The only way to prevent the legitimate users from coming to agreement about the state of the blockchain is to control enough of the total computing power that you can pretend the group disagrees with itself, or even that your opinion is the real consensus and all the other users are lying about the state of the blockchain.
That requirement for resources is a good thing , because it means that interfering with the group's consensus takes a lot of resources a. Unfortunately, PoW consensus algorithms as we presently know them require a constant, ongoing expenditure of resources just to work normally. The work has to be done regardless of whether someone is trying to interfere or not , and someone has to pay for it.
Most existing PoW blockchains, such as Bitcoin, pay for these costs with the pre-agreed creation of coins, also known as inflation. This salary has to be doled out whether or not anyone is attacking, which seems quite inefficient. Motivated by this and other considerations, a new solution to the problem of decentralised consensus was proposed , referred to as Proof of Stake.
In this new algorithm, agreement within the blockchain would be measured not on the basis of how much computing power agrees with the current state, but instead on the basis of how much digital currency agrees with the current state.
The owners of this digital currency hold a financial stake in the success of the blockchain that tracks it, which is where we get the name for the algorithm. Short version - POW requires miners or physical computer to be turned on and processing the transaction.
This can be inefficient since better computers are created and optimized for mining which may lead to centralization such as bitcoin. POS is greener and requires no energy. There's also the nothing at risk problem which says that if there is a fork, you can continue on both forks until one dies.
Read more here:. Proof of Work PoW and Proof of Stake PoS are the two protocols having same purpose and the purpose is to establish consensus on the blockchain i. So guys when a block is produced, it needs to be appended to the blockchain and all the miners try to mine it. Let me clear it. When a block arrives, we hash all of the transactions in the block and we get a hash of those transactions then we need to find proof or in the blockchain it's called "nonce random bits ".
Again from starting, the miners recieve hash of the new block with transactions and they need to find the other part Proof or nonce so when they append those two together into a string and after hashing this string, they should recieve an answer and the miners know what they are looking for and this answer is publicly known. In bitcoin blockchain, the string of the answer which is a hash, it need to start with certain number of zeroes and all the miners know this thing.
The whole challenge is to find the nonce and it's very hard to come up with the correct nonce so the miners try different different nonces with the hash of the block to find the correct nonce, they do see their new hash which start with certain number of zeroes and if they dont find zeroes in starting then they again try a new different nonce. They try this thing again and again to find the correct answer. It takes a lot of time before a miner finds the correct nonce to get the correct answer.
The first miner who finds this correct nonce for that block will be awarded some bitcoins and the block will be appended to the blockchain and all of the miners will be notified that this block is mined and appended. It's costly and inefficient because electricity is being used by millions of machines to find that nonce. This was the explanation of Proof of Work Lets come to Proof of Stake.
In PoS, the miner who have the most money in wallet will be most likely to mine the new blocks and it will no longer be called mining. Instead of counting CPUs or GPUs or how much money you have spent on hardware, it counts the money you have in blockchain or in your wallet and this is done because the system thinks that when you have a lot money in the blockchain, you are less likely to harm the network and to mine the false blocks and if you mine false blocks you will decrease the value of your money in the blockchain.
In this, the person with more money in the blockchain will be able to mine the new block. I want to add more. In PoS, when a validator validates an algo or block, he just put some money or stake to validate that block, you cant get it back until the block is validated or you can actually lose your money which is put to solve that block, if you validate a false block in casper update.
Sign up to join this community. The best answers are voted up and rise to the top. Stack Overflow for Teams — Start collaborating and sharing organizational knowledge. Create a free Team Why Teams? Learn more. What's the difference between proof of stake and proof of work? Ask Question. The following are the slides for the presentation. As with Casper FFG he have the concept of validators. A validator has to follow a fork choice rule that define which blocks form part of the correct chain.
All the other validators reinforce the dominance of the correct chain and as with Casper FFG we have the concept of finality. Once blocks are finalized, they cannot be reverted. In this fork choice rule instead of trying to find the longest chain, we inspect the tree of blocks from the genesis block and go up in the hierarchy of the tree and at every step we a have decision based on the support each block has. Each validator has created a block at different time intervals. In the blockchain we have a fork of two paths.
To determine the correct path what we are interested in is the last block being created as this determines the support of the blocks by the validator. Marked in blue. Hierarchy in position 1. Block created by validator A. Hierarchy position 2. We have a block created by B. Node has a weight of 5. Hierarchy position 3. We have a fork with block created by validator D and block created by validator C. Block created by validator D is only validated by himself. It has a weight of 1.
While block created by validator C is validated by block A,B,C. E having a weight of 4. The nice thing about this protocol is that the minority can never beat the majority. If validator D continues to create block on the path A-B-D at a faster rate compared to the other validators that path will only be validated by the minority rendering such an attack useless.
Important to note that by following these rules there is no way the validators can choose the wrong path unless they willingly doing so to perform an attack. All the validators have the knowledge to validate the correct chain. This provides us with the concept of finality.
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Ethereum is moving from Proof of Work towards Proof of Stake under its new “Casper” protocol. Despite its many benefits, the drawbacks of Proof. Proof of Stake vs Proof of Work. Proof of work, in simple terms, consists on producing a value that's very difficult to generate but fairly. Proof of stake has several advantages compared to proof of work, and represents what blockchains will look like in the future. A set of validators cast public.