Friendly ghost that everyone wants to like

On the upcoming introduction of Casper or the masterly attempt by Ethereum to sit on two chairs at once

The Proof-of-Work cryptocurrency mining model was criticized at the very early stages of technology development. In addition to the obvious advantages in the form of "computing power", which is impossible to forge and with which it is impossible to cheat, there is a whole host of shortcomings. This is the cost of equipment, and the domination of capital over ordinary miners, and even harm to the environment. That is, for all the time of its existence, the PoW-model has made many opponents.

On the other hand, the alternative methods of mining have so far somehow not taken root in large blockchains. Many commercially successful cryptocurrencies are mined, moreover, using the Proof-of-Work protocol. But is there any alternative to this “barbarism”?


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Of course have. First of all, we are talking about the Proof-of-Stake method of extraction or “proof of ownership”. And the first steps in implementing this algorithm among the popular cryptocurrencies were made by the Ethereum developers headed by Vlad Zamfir . In fact, he is the author of the Casper protocol. But in this whole story there is a couple of “BUT”, because Casper, although a “friendly ghost”, tries to please everyone too much at once.

Okay, google, what is Casper?

Casper is the good ghost of a dead boy. The first mention of the Casper protocol for Ethereum appeared in the second half-end of 2017. Then, at the level of rumors, various publications wrote that the Ethereum team, under the strict guidance of Buterin, was working on a radical change in the blockchain paradigm of the ether and its translation into PoS. For example, in November 2017, Forklog wrote about this. At the same time, the development team published Casper "manifest" on GitHub and it turned out that the Ethereum network in the future will use the hybrid PoW / PoS approach.

Yes, they could not completely get rid of Proof-Of-Work.

In fact, such a movement by the “ether” team is an extremely accurate maneuver so that “both ours and yours” turned out, and not “ours are waving to yours” . Objectively, Buterin and the company could not abruptly abandon PoW, because it would kill the entire network. Moreover, the PoS principle itself has a weak point in terms of the fact that it is not clear who will provide the infrastructure for conducting transactions within the network, while the PoW blockchains are a self-supported structure. Of course, the manifesto appeared even before the popularity of crypto-games like Cryptokitties grew, but Zamfir looked like he was in the water: now Ethereum, in addition to the looming threat of ASIC miners, also has a network performance problem on the horizon.

Some short-sighted publications have already uncovered trombones and are preparing to play a funeral march on Buterin’s brainchild, but this is far from the case. Yes, the “ether” has several problems, for example:

• Low transaction speed.
• Rising transaction costs.
• The inability of the network to serve large projects as a payment system.
• Looming like a cloud on the horizon, Ethash-compatible ASIC-miners.

But it is in order. Very seriously on Ethereum "hit" the game with Donat, the same notorious Cryptokitties, in which you can buy cats for airs or, for example, grow them. When they first appeared at the end of 2017, it was just a bomb, but the more time passes from the moment of their appearance, the more criticism goes to the developers of Ethereum. For example, that transactions become more expensive and run too long against the background of standard banking services.

The experience with crypto-games has shown that the “ether” is concrete, and the whole cryptosphere is not yet ready to provide mass transaction services. Of course, it is likely that there are blockchains more productive than Ethereum, but they do not have an audience of "ether", so we do not take into account.

And, of course, Casper is the answer to the developers of ASIC miners. We wrote that “Buterin didn’t seem to mind,” but Vitalik actually prioritizes: why rush around the corners and worry about ASIC, when there’s a bomb like Casper on the way? According to the manifest of the new protocol, its implementation will introduce the following changes in the functioning of the network (if very briefly):

• The unit reward will be reduced from 3 ETH to 0.6 ETH.
• The introduction of PoS mining.

“In the presented specifications of the first stage of Casper, the transition from a pure Proof-of-Work to a hybrid PoW / PoS system is described. In this scheme, the entire mechanics of the Proof-of-Work is preserved, but the reward for the unit will be reduced (0.6 ETH), and the PoS mechanism is added, ”the developers say.

Moreover, Buterin does not exclude that the reward to miners can be reduced to 0.22 ETH per unit . It is not completely clear where the “difference” between the award of PoW miners and the cost of the block will go. Someone says that the remaining ~ 2.5 "ether" will be distributed between the PoS-miners, but there is no concrete evidence of this. Moreover, the fact that PoS mining is not the most profitable enterprise works against this version.

According to preliminary information, the introduction of a “friendly ghost” will take place at block 5,900,000. It is then that the reward will be reduced and PoS mining will be introduced. Adding to the intrigue of the situation and the fact that now, if you go down to trading terminology, ETH shows a horizontal movement on the stock exchanges, that is, the community does not know whether the course will go up or fall down. This is influenced by the general volatility of cryptocurrency, and the statements about the appearance of ASIC-miners and the notorious “friendly ghost”. That is, until Casper is implemented, ETH is a highly unstable altcoin, which can either go up or punch another bottom at any moment.

And what about the capacity?

Buterin’s disregard for the problems of ASIC miners is only partially due to the introduction of Casper. Obviously, with a decrease in remuneration per block at least 5 times, there will be an outflow of computing power of miners who will transfer their GPU farms to other blockchains. Now ETH is though the most profitable direction, but the profit from mining is not 500% compared to competitors. Rather, we are talking about a fork of 10-20% relative to the same altcoin PIRL or ELLA. As a result, ETH miners can "spread out a thin layer" on various altcoins or leave in general in an unknown direction.


On the road in an unknown direction, go to us and also to the main

It is not yet clear how the Buterin team will deal with the reduction in the number of miners in the network, given the radical nature of the upcoming changes. It is quite possible that Casper will only increase the attractiveness of developing high-performance ASIC miners, which will give green light to big capital in the ETH network. At the moment, there are no objective reasons to remain on the mining ETH after the introduction of PoS from current miners without serious "on-air" savings, given the decline in yield by 5 times.