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Ethereum's "Difficulty Bomb" refers to the increasing difficulty level of puzzles in the mining algorithm used to reward miners with ether on its blockchain. As puzzles become more complex (and miners find it harder to earn ether), there will be a substantial delay between the production of blocks on the ethereum blockchain. This will slow it down in exponential terms and its economy will become less attractive to miners. The beginning of this scenario is referred to as "The Ice Age of Ethereum". During this period, ethereum will move from Proof of Work (PoW), which requires miners to earn ether by competing against each other to solve puzzles and earn rewards, at Proof of Stake (PoS), where prizes are distributed based on the stakeout or ownership of the currency. The transition between the protocols will take place by the end of the year as part of the update of Casper on ethereum. The difficulty bomb will prevent the bifurcation of the ethereum blockchain during that period.
Why was the difficulty bomb introduced?
Ethereum's difficulty bomb is a deterrent to miners, who may choose to continue with PoW even after the blockchain transitions to PoS. The main reason for doing so could be to shift the balance of power and profits away from the miners into the hands of investors and blockchain users. If all miners do not pass the stake test, there is a danger that the ethereum blockchain may bifurcate. A similar situation occurred in 2017, when bitcoin miners forced a fork into his blockchain by throwing their weight behind the bitcoin cash. (See also: Bitcoin vs. Bitcoin Cash: What's the difference?) The founders of Ethereum, however, anticipated this possibility and planned their blockchain to incorporate increases in difficulty levels for the mining algorithm.
Evolution of the difficulty bomb
The difficulty levels of the ethereum blockchain increased in November 2016, from the 200,000 block onwards. "At that point (right around the release of the Serenity milestone), we will see a significant increase in the difficulty, which will begin to push up block resolution times," said Stephen Tual, chief commercial officer of Ethereum in a blog post from August 2015. Serenity is the last stage of evolution of ethereum after Metropolis, its current phase that began in October of last year. (See also: Ethereum reveals that the Metropolis pitchfork will occur in September). A difficult date has not been set for the release of Serenity.
An initial timeline suggested that a slowdown of the ethereum blockchain would occur in less than a month. However, subsequent delays in the versions for the ethereum code have further postponed the final release date. This also delayed the passage of ethereum from PoW to PoS. According to a previous estimate by the co-founder of Ethereum Vitalik Buterin, the "final destiny" in terms of significant delays between the blocks will occur in 2021.
Investing in cryptocurrencies and other initial offers of coins ("ICO" ) is highly risky and speculative, and this article is not a recommendation of Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since the situation of each individual is unique, a qualified professional should always be consulted before making any financial decision. Investopedia does not make any representations or warranties regarding the accuracy or timeliness of the information contained in this document. On the date this article was written, the author has small amounts of bitcoin and litecoin.
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