Within the Ethereum plan to reduce energy consumption by 99%

Ethereum intends to move on to the game test in the future. Making a move to the POS will presumably cut the energy consumed a hundred times, or about 99%. There have been repeated claims that the cryptocurrency uses too much energy and is therefore inefficient and not very respectful of the environment. Some reports find that the mineral cryptocurrency uses more energy than the extraction of gold, on the contrary. Some researchers have found that mining is overall negative for the environment.

Ethereum started with the goal of becoming a global computer, with the blockchain being the first to introduce smart contracts and, at the same time, a thriving community of developers. The price of Ether peaked at around $ 1400 previously in 2018, and has recently traded well below $ 200.

Similar to Bitcoin, Ethereum uses proof of labor as a consensus mechanism to protect the blockchain. However, the founder of Ethereum Vitalik Buterin stressed the importance of the energy spent to secure the Ethereum blockchain. Even if you do not care about the ecological problems posed by PoW-based blockchains, there are real people who are deprived of basic needs like electricity.

This is largely due to the fact that in PoW-based blockchains, miners run to cryptographically secure transactions. This requires miners to have an advantage in terms of computational capacity, which results in fires of millions of dollars in costs related to electricity and mining.

According to Vitalik, Proof-Of-Work is based on the concept of large amounts of electricity and mining hardware based solely on the premise that generates rewards in the form of mined cryptocurrencies. This means that more mining power is directly proportional to revenue.

The proof of work necessarily acts on a logic of great power incentivized to exist from enormous rewards

Proof-Of-Stake applies a completely contrasting philosophy to network security

The pole test breaks this symmetry by relying not on safety prizes, but rather on penalties.

Enter Test Mail

With Proof-Of-Work, miners compete to process the same set of transactions. However, the Field Test selects randomly validators to process and protect transactions.

In a Proof-Of-Stake system, validators are the miners' equivalent. Secondly, the main concern within a POS system is to ensure that validators are honest at all times. This is addressed by requiring the validators to set up a share called in ether as collateral.

The "single phrase philosophy" of the stake test is therefore not "the security comes from the burning energy", but rather "the security comes from putting economic value at a loss"

The greater the quota of a validator, the greater the chances of being chosen to validate the transactions. More importantly, the captured validators who cheat have their stakes to lose. This asymmetric difference between the potential rewards and the risk of cheating forces a validator to remain honest at all times.

One of the most interesting things about the PoS is the fact that data validators are not spending so much energy (compared to PoW) to protect the network, the reward could be significantly lower. According to the Casper Github wiki:

Because of the lack of a high consumption of electricity, there is not much need to issue as many new coins to motivate participants to continue participating in the network.

Competition within the POS panorama

Ethereum, which has its first mover advantage, has certainly taken giant steps in building the world's first computer. We now have many protocols built on Ethereum, like MakerDAO, which is a decentralized stablecoin that has blocked almost 1% of the ETH offer. In addition to this, there is a thriving DeFi community (Decentralized Finance) which includes projects such as Compound, dYdX, CDx

However, there are other teams competing to build POS claim chains such as EOS, Cardano, Dfinity and Cosmos, among others. It is yet to be seen whether Ethereum will maintain its position number 1 as an intelligent contracting platform, at the same time overcoming the problem of energy consumption and, above all, downsizing.

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