The sheer number of transactions Ethereum can process without needing to consume too much electricity. It is a significant reason it went from speculative investment to the second most valuable cryptocurrency.
Ethereum has just announced its most significant upgrade. Metropolis will come with an energy-saving feature. That will slash the energy needed for each Ethereum transaction by 99.9%.
“The upcoming “Metropolis” release will include a new consensus algorithm. Casper FFG will allow for Ethereum to transition from a Proof-of-Work. Based blockchain to a Proof-of-Stake (PoS) based blockchain. The transition results from two months of testing and preparation by the Ethereum team. But it has not been without its challenges:
Ethereum spent most of 2018 preparing for the Metropolis hard fork. The majority of the Ethereum community agreed with the PoW method. Still, there was a vocal minority that wanted to move to a consensus algorithm that would better suit their needs.
Metropolis is a universal upgrade and will make things easier for most users. It will add new features and capabilities requested by community members, including Casper FFG, which will make it possible to transition from PoW to PoS.
Metropolis will be the first iteration of Casper FFG, which according to the Ethereum Foundation, uses “a hybrid of different proof-of-stake schemes.” According to Ethereum’s blog post, each time a new block is mine on the PoW chain, there will be a chance that the next block will be created on a PoS block. This is the coin age period during which the protocol (in this case, Metropolis) validates all transactions.
SO WHAT IS THE MERGE? : The merge is a step in upgrading the code base, which includes a new feature called Casper.
SO CASPER? WHAT IS THAT? :
Casper is an Ethereum PoS protocol that maintains a set of validators on the network. These validators are paid through transaction fees and newly created ether. This way, validators are incentivized to process transactions and provide security for the network.
HOW IS THE ETHEREUM BLOCKCHAIN GOING TO BE DIFFERENT? : The Ethereum team believes this new protocol will reduce the energy needed to run the network. It also promises a more efficient network to process more transactions per second.
SO HOW, WHAT DOES THE METROPOLIS ROLLOUT PLAN LOOK LIKE? : This new
protocol will be implement gradually. First, the team will run a public test net, where all Ethereum developers can prepare their clients and help the team test this new protocol. Then, in October 2018, the Ethereum leading network will be update to include Casper FFG.
SO IS ALL OF ETHEREUM GOING TO BE ON ETHEREUM CLASSIC? : No. You can continue using the Ethereum classic network, which has features and specifications.
SO WHAT’S THE TIMELINE? : No dates were given, but the team indicates that during the first half of 2018, a full-fledged Casper FFG will be introduced. This will be followed by a complete upgrade of the Ethereum leading network, including Casper, in October 2018.
The team believes this new protocol will reduce the energy needed to run the network. It also promises a more efficient network to process more transactions per second.
SO BREAKING IT DOWN? WHAT DOES THIS MEAN? : This means that Ethereum is moving from one algorithm to another, which could increase from 7 transactions per second to around 100. One of the reasons why this is important is that it could make Ethereum a more viable alternative to Bitcoin in terms of scalability and speed.
SO WHAT ARE THE DOWNSIDES? : The merge is a big step for the Ethereum network as it will completely change how people interact with the protocol. This does mean that there will be growing pains, especially for individual users and exchanges.
SO WHAT CAN YOU DO?: There will be many new things to learn and understand, but most importantly, you should only use trusted services and exchanges. As always, do your research, proceed with caution and only invest in what you are willing to do.
HOW BIG OF A DEAL IS THIS? : The next-gen Ethereum network will offer the following:
Several new and exciting features: Casper FFG, sharding, PoS rewards for validators, improved privacy, and interoperability.
A more energy-efficient network: Ethereum’s energy consumption has been a significant problem since its inception because of the ever-increasing number of transactions. According to the team, they are confident this won’t be an issue as they have spent months improving various features to ensure that Metropolis can achieve its energy efficiency goals.
Increased scalability: Ethereum runs on a PoW system, an essential piece in the scaling puzzle. However, the next-gen Ethereum network will run on Casper FFG, a new hybrid scheme of PoS. This could deliver better scalability as it is expect to be able to process more transactions per second than PoW.
Lower transaction fees: While it is too early to say whether Ether prices will drop due to PoS, it is expected that the next-gen network will reduce transaction fees. This is possible because validators are rewarded with transaction fees and newly mined ether. The amount of ether needed for transactions will also be reduced as it will replace the block reward with inflation.”
The team has also indicated that testing began in January 2018, and like every other blockchain project, there are challenges ahead. It is also worth noting that several developers have recently resigned from the development team. However, if everything goes according to plan, Ethereum will be much more scalable and efficient, at least in theory.
THAT SOUNDS LIKE A NO-BRAINER.: The Ethereum community is currently in the middle of a fight between two different camps. One side believes this will solve Ethereum’s scaling issues, while the other side is firmly against it, claiming that this could lead to a centralized network and much fewer nodes, making it easier for mining pools to gain more power. This, of course, entirely depends on how the team implements this new PoS protocol, and some people view Casper as a direct threat to Ethereum Classic (ETC).
SO IS IT A GOOD OR BAD IDEA? : There is no doubt that the current level of scalability is a problem for Ethereum. Currently, the network can only scale so far, and new projects are rapidly being develop on platforms like Ethereum, EOS, and TRON. If Metropolis succeeds, it will be one step closer to becoming the world’s first mainstream platform for decentralized applications. On the other hand, if this upgrade fails or has serious flaws, it could lead to many users migrating their tokens to other networks.
WHAT ARE THE CHALLENGES? : The development team has spent years testing Casper. However, there are many concerns regarding its performance and whether it can deliver what it promises. According to the team, they have completed a significant hurdle by introducing a new concept called “transaction-less state transitions.” This means that Ethereum is moving from one algorithm to another, which could increase from 7 transactions per second to around 100.
Conclusion:
The Ethereum network is one step closer to moving from PoW to PoS. While the team has made a lot of progress, it is still too early to tell whether this will be a success. Ethereum remains the leader in smart contracts, dApps, and ICOs, while Bitcoin remains the top cryptocurrency in value and market capitalization.
