Ethereum Foundation Wants To Reduce Its Energy Consumption By 99%… This Is What Their Plan Of Action (POA) Looks Like
Moving forward, a spokesperson for the Ethereum Foundation has made it clear that they want ETH to transition to a proof-of-stake based framework— which will reportedly cut the currency’s overall energy consumption by a whopping 99% (which is an impressive feat to say the least).
As many of us already know, over the past few months many controversies have surrounded Ethereum— especially in regards to the currency’s energy use and its overall negative impact on the environment. In this regard, there have been many studies that have been published which claim that the premier altcoin uses more electricity than that used by the global gold mining industry. In the same breath, there have also been other research papers that have stated otherwise (thus calling into question the sanctity of the data presented in the aforementioned reports).
An In-Depth Look At Ethereum
Ether was first introduced into the crypto market a little less than a decade back. Upon its introduction into the market, the crypto-asset possessed the world’s only blockchain ecosystem to make use of smart contracts. Not only that, at the time, the currency was one of the few active projects to also possess a thriving developer community.
In terms of its digital framework, Ether makes use of the PoW (Proof-of-Work) consensus mechanism to secure its blockchain. However, as we all now know, PoW makes use of cryptographically secure transactions which not only use up millions of dollars worth of electricity but also bring with it high mining-related costs.
Some of the other key aspects of PoW include:
- The Proof-Of-Work algorithm generates rewards in the form of mined cryptocurrencies.
- The protocol functions solely on the “logic of massive power incentivized into existence by massive rewards”.
What’s Different About Proof Of Stake?
As mentioned earlier, when looking at the Proof-Of-Work protocol, miners essentially work towards processing the “same set of transactions”. However, in the case of PoS, the protocol “randomly selects validators” to process native transactions.
In addition to this, the Proof-Of-Stake module treats validators and miners as equals within its ecosystem. Not only that, due to its intrinsic design, the PoS system has been devised to make sure that validators remain honest at all times (something that is achieved by getting validators to stake a set amount of ETH as collateral.)
Also worth mentioning is the fact that the greater a validator’s stake in the matter, the more chances he/she possess at being picked to validate transactions within the ETH ecosystem. In the same vein, if a validator is found to be indulging in unethical activities, he/she has a lot to lose monetarily. As a result of this novel insurance policy, validators are forced to remain honest at all times.
Last but not least, one of the other central aspects of PoS is that validators do not have to utilize as much energy as PoW to bolster the network’s security.
While Ethereum has definitely made immense progress over the past few years, there are now many other protocols that have been built atop its native blockchain. For example, we now have projects such as MakerDAO that serves as a decentralized stablecoin as well as many other exciting offerings to choose from.
Also, in recent times, there have been other projects such as EOS, Cardano that have developed POS compliant blockchains— thus providing Ethereum with stiff market competition.
Moving forward, a spokesperson for the Ethereum Foundation has […]