Proof of Importance is the underlying technology behind NEM which determines who gets to verify transactions. This consensus mechanism is similar to Proof of Stake (PoS) in that it requires a certain amount of cryptocurrency (10,000 XEM in NEMs case) to verify transactions. It differs to PoS in that it solves the issue of a person having more stake being more likely to verify transactions, thus receiving more rewards. In other words, PoS helps the rich get richer, and PoI aims to alleviate that.
The last few weeks have been pretty exciting for us at Planet Blockchain. With Coinbase proposing to list 3 of our top currencies, we’ve been working hard on our own contribution to the cryptocurrency space.
A real pain point for us when using Cardano was having to use Daedalus and sync it with the blockchain. This takes ages and is prone to require restarting Daedalus, and/or your computer! No thank you! Even when you achieve the Nirvana state of a sync’ed Daedalus, you now have to input your 12 secret words, aka your private key, to restore your wallet. If you’re not on a device you own and trust then this is obviously not an option. The owner of the device, or, heaven forbid, website, you enter your 12 secret words into has the ability to take all your funds, if they want to. They might do it instantly, they might do it tomorrow, or they might do it in a years time.
So what’s the solution?
A light wallet, or mobile wallet, where the only information you put into the wallet is your public address, or addresses. There is absolutely no way to take someone’s funds just from their address, which makes this a secure solution to looking up your balance. Many of these solutions exist for popular currencies like Bitcoin. If only there was one for Cardano.
Luckily for you, dear reader, we’ve built one.
Once you’ve set up your wallet through Daedalus, you can copy and paste your addresses into the mobile wallet in order to track your balance(s). Make sure to always protect your back up phrase for your wallet and never share it with anyone. Including us, and any other wallet software.
Check out the app and let us know what you think
We at Planet Blockchain are super excited by Cardano and the cryptocurrency space in general and commit to bringing you the highest integrity information on the topics we care about the most. Thank you for being part of our small community and we hope you enjoy the app. You can read more about it here.
Everything you need to know about HTC Exodus
HTC introduces blockchain phone – HTC Exodus
“Our vision is to expand the blockchain ecosystem by creating the world’s first phone dedicated to decentralized applications and security,” HTC states on a website dedicated to the new device.
They go on to say “With the release of the HTC Exodus we can now make this a reality… we believe we can help reshape the internet.”
HTC Exodus Design
HTC hasn’t released any official images of what the Exodus will look like. Instead, the company posted a rough sketch of what appears to be the smartphone’s components. Please see below.
HTC Exodus Spec
There aren’t many details when it comes to spec either. What we do know is that the phone will feature a native cryptocurrency wallet. The HTC Exodus will also support decentralized apps through the phone’s hardware, which it claims are more secure than standard apps. The phone is also expected to allow the trading of native crypto coins without any mining fee. According to their website, there are eight major features of HTC Exodus:
- Trusted hardware
- Tons of protocols
- Universal Wallet
- Trusted UI
- Save your ID and data on phone
- DApps on mobile
- Phone will act as a node of Ethereum and Bitcoin
- Exodus forum for the users
Initially, it will launch with support for Bitcoin, Ethereum, Dfinity networks, and Lightning Network, but the company says it will eventually support the entire blockchain ecosystem. HTC plans on creating a native blockchain network with all eExodus phones, in an effort to double and triple the number of nodes of Ethereum and Bitcoin.
Release date of HTC Exodus
No release date or price has been set for HTC Exodus but you can reserve the HTC Exodus phone online. The company has hinted it might even accept cryptocurrency when the handset does go on sale.
HTC Exodus to run separately from main business
Nano vs Bitcoin Cash
In this article we will be discussing Nano vs Bitcoin Cash. As people begin to see the flaws of Bitcoin,
Nano vs Bitcoin Cash – which cryptocurrency is the leader of the pack?!
What is Nano?
Nano has been tipped to become the next Bitcoin. The main reason for its fast growth and success is because of its architecture. Though the cryptocurrency operates by providing a decentralized model of bypassing centralized institutions such as banks, it design utilizes block-lattice architecture and delegated Proof of Stake (PoS). This eliminates the need for miners, makes the network fast, and lighter.
These unique features and applications mean that Nano is indeed better than Bitcoin and most cryptocurrencies that use Proof of Work (PoW) and standard Proof of Stake (PoS) consensus models.
What is Bitcoin Cash?
Bitcoin Cash is a decentralized peer-to-peer cryptocurrency that was developed from the Bitcoin Core. Bitcoin Cash was formed as a hard fork of Bitcoin. In some cases, you will get the cryptocurrency being referred simply as an upgraded/ peeled/ or forked version of Bitcoin core software released in August 2017. A further Bitcoin Cash hard fork took place in May 2018.
We will now evaluate the advantages and disadvantages of Nano vs Bitcoin Cash.
An analysis of Nano vs Bitcoin Cash: advantages & disadvantages
What are the advantages of Nano?
- No transaction costs
- If you have some cash and want to send abroad using the banking system, the chances are that it will be very expensive. Even the cryptos that came earlier such as Bitcoin and Ethereum are still very expensive. For example, the cost of sending cash using Bitcoin network was more than $ 50 in January of 2018. However, Nano has ushered a new dawn in cryptocurrencies where users can make transactions for free. This is one of the benefits drawing a lot of people to the network.
- Open source & anonymous
- One notable thing about cash stored in the bank is that bank account details can easily get leaked to third parties. Worse still, your bank account can easily get frozen if a court battle whirls to your doorstep. However, Nano is an open source and anonymous network that is hidden from third parties.
- The main network that allows users to own the network
- When people use the standard payment services such as PayPal, MasterCard, and banking, they feel passive. Once they make the savings or send cash, they get the sense of accomplishment and move away. Like other cryptocurrencies, Nano helps people to join, use, and own the network. This means that you are part of the network and your vote will be required when consensus is needed.
- One of the most secure networks
- When people join the cryptocurrency network, they are interested in getting the most secure option for their assets. The delegated proof-of-stake model used in the Nano system helps to keep it secure from miners who might have malicious intentions.
- The commitment of the Nano development team has also managed to keep the system free from hackers since inception. These considerations have won the Nano the tag of the most secure blockchain in the crypto world.
- Allows users to operate with utmost freedom
- If you want to send cash abroad on the weekend or at night, the chances are that it will be impossible. Even those that have some mobile activated applications only allow people to send a limited amount of cash. However, Nano cryptocurrency network is different. The crypto network allows users to operate with utmost freedom. Whether it is at weekend, public holiday, or at night, you are sure of being able to use the network.
- The cryptocurrency value and community has been growing steadily
- The effectiveness of a crypto network is partly gauged by its value and community. For Nano, these parameters have been experiencing positive growth in since inception. As the value took an upward trend early in 2018, the crypto community also kept growing. Many people believe that this growth will keep growing and the crypto could become the next Bitcoin.
What are the disadvantages of Nano?
While the benefits associated with Nano are very many and appealing, it is important to appreciate that the network also comes with a lot of risks. Like other cryptocurrencies, users in the Nano network operate anonymously. While this is seen in many ways as an advantage, it is also a great demerit. The anonymity makes it easy for users to fall to scammers. Other risks of operating in the Nano network include.
- Risk of attack by hackers
- Though the Nano network development team has been working extra hard to keep the network safe, and no successful attack has been reported since inception, you cannot be 100% secure.
- The risk of new and more appealing cryptocurrencies
- The third generation cryptocurrencies such as Nano are mainly aimed at addressing shortcomings noted in the previous networks. For example, Nano targets addressing shortcomings noted in the Bitcoin and Ethereum networks. However, newer and more advanced cryptocurrencies are also likely to emerge in the future and pull down the appeal of Nano. This could lower its value and diminish the trust people have in it.
- High volatility
- Cryptocurrencies such as Nano have demonstrated to be highly volatile. Every time that something related to the crypto industry takes place, Nano and other cryptocurrencies respond immediately. When China announced that it was going to burn ICOs (Initial Coin Offering), Nano value responded by shifting downwards. A similar downward shift was noted when a cryptocurrency exchange was hacked in South Korea towards the end of 2017.
- The looming regulations
- Every country in the globe is working on some form of regulation to help control cryptocurrencies. From China to the United States, the governments are feeling threatened by the cryptocurrencies so much that they want to limit their growth. China has already outlawed ICOs and looks committed to suppressing other crypto related activities. If most countries pass harsh regulations as anticipated, there is a risk that adoption and use of Nano could go down or diminish completely.
- Direct threat to the banking system
- While the first and second generation cryptocurrencies were aimed directly offering an alternative to banks, third generation cryptocurrencies have been working on partnerships. For example, OmiseGO and Ripple provide banks with a platform for enhancing payment as opposed to looking like a direct threat. But Nano architecture aims at replacing the banks especially with its zero transaction fee. This could deny Nano support from such financial institutions as they channel their clients to other friendly networks such as Ripple.
What are the advantages of Bitcoin Cash?
The fast growth of blockchain technologies is an indication of the public acceptance and approval. At first, Bitcoin and other cryptocurrencies were considered disruptive and a threat to the conventional institutions such as banks. But the narrative has changed over time. Today, even governments are starting to appreciate the huge benefits that come with using blockchain technologies. Bitcoin Cash has particularly stood out because of its unique design and fast growing value. Here are the main benefits to anticipate after joining the network.
- Bitcoin Cash is completely anonymous
- The main attraction drawing more users to the BCH network is the high level of privacy. The team behind Bitcoin Cash network targeted enhancing anonymity for all their operations. From traders to individuals, no one wants third parties such as banks to know their personal details. All the transactional info in Bitcoin Cash network are encrypted so that even miners who confirm transactions can only ascertain the amount but not the owners.
- Payment assured across the globe
- If you want to make payment on a weekend, during public holidays, or at night through the bank, it is impossible. Most of these institutions only work between 8 am and 4 pm. However, Bitcoin Cash empowers you to make payments any time of the day or night. Because you have the network right in the wallet or node, sending payment is only a click away. This is the freedom that many have yearned to get for years.
- The network is owned by users
- When you join the Bitcoin Cash network, it becomes yours. That is right. The Bitcoin Cash network is owned by users. You are part of the system and will be involved in making the decisions on the network. Instead of relying on a centralized authority, Bitcoin Cash relies on the consensus of users spread on different nodes in the network.
- Freedom from third-party seizures
- If your cash is in the bank, the risk of getting seized is very high. A case can easily whirlwind into your doorstep and drag you to court. Whether it is a social media or workplace issue, you can easily get involved without necessarily committing a criminal offense. With such risks, the savings in the bank are an easy target by lawyers. However, joining and storing your fund in Bitcoin Cash provides the freedom from third-party seizures. You operate anonymously and at no point will the court freeze your Bitcoin Cash account.
- The value of Bitcoin Cash continues to grow rapidly
- As more cryptocurrencies enter into the fast-growing industry, users want to join those that give them better prospects for growth. Bitcoin Cash is one of them. Though it was only 5 months by close of 2017, it managed to hit top five most valuable cryptocurrencies by then. Its growth has been remarkable with experts in cryptocurrencies indicating that it could easily rival Bitcoin.
What are the disadvantages of Bitcoin Cash?
Just like Bitcoin Cash has numerous benefits, it also comes with a number of risks that users should know of. The hacking in a South Korean exchange at the end of 2017 saw many cryptocurrencies including Bitcoin Cash slump in value. Therefore, no one can be sure of what will happen to Bitcoin Cash in the next few days, months or years. Here are the main disadvantages associated with Bitcoin Cash.
- The risk of being overtaken by newer cryptocurrencies
- Bitcoin Cash was forked from Bitcoin to create a new and more effective cryptocurrency. With new cryptocurrencies joining the industry at a supersonic speed, the risk of Bitcoin Cash getting overtaken by newer and more effective networks is rather high. This could see Bitcoin Cash getting relegated to the back seat as people scramble for the new option.
- The looming regulation
- From the US to China, the topic of cryptocurrencies is a hot potato issue. There is a general feeling that many governments are about to implement laws aimed at punishing cryptocurrencies. For example, Russia and Thailand have cautioned their traders that upcoming laws could make their cryptocurrency related operations illegal. The looming regulations are making a lot of people shy away and could pull down the value of Bitcoin Cash within hours after getting passed into law.
- The danger of losing Bitcoin Cash
- Like other cryptocurrencies, your Bitcoin Cash can also be lost. You could easily lose BCH through hacking of the personal computer, attack on the exchange, or sending to the wrong address. The danger of losing BCH is that they are very difficult to restore. In most of the situations such as sending BCH to the wrong address or getting hacked means that the coins are gone forever.
- The risk of getting involved in scams
- The anonymous nature of Bitcoin Cash has become an instant attraction to fraudsters. Because the transactions are completely encrypted, scammers are sure that they cannot get discovered. This puts users at a risk of getting drawn to scams without knowing. Some scammers often release fake ICOs (Initial Coin Offerings) and steal from unsuspecting clients. Others might opt to acquire or make fake products and sell through the BCH network. You must be extra careful to only buy and carry transactions with trusted addresses.
- High volatility
- While the fast-rising demand for cryptocurrencies has drawn a lot of people into the industry, the level of volatility is very worrying. Within a very short moment, the value of Bitcoin Cash can plummet and cause huge losses. This has been experienced in other cryptocurrencies such as Ethereum during the DAO attack and Bitcoin during the Silk Road Scandal.
- The Com
- Many people have said that the whole idea of Bitcoin Cash was little more than a scam to gain money from the Bitcoin name. Numerous lawsuits have been filed against people who are claiming Bitcoin Cash as being ‘the real bitcoin’, which is marring the currencies reputation.
Nano vs Bitcoin Cash: evauation & conclusion
In the Nano vs Bitcoin Cash debate, both have their advantages and disadvantages as we have seen. However, overall, Nano seems to have the largest scope for growth. The recent ‘‘Bitgrail hack‘ wasn’t a flaw with the technology of the network – the price dip was purely speculative and emotional.
Many coins have been hit hard by the 2018 ‘bear market’ but it seems in comparison Bitcoin Cash has been hit the hardest. Newer altcoins are taking over. Furthermore, an article was recently published stating how Bitcoin Cash might be in trouble. Meanwhile, Nano is among the top coins trading today.
Having evaluated the advantages and disadvantages of the two cryptocurrencies, it would seem in the Nano vs Bitcoin Cash debate, Nano is the stronger cryptocurrency of the two. It is also a hot contender for the most promising cryptocurrency of 2018.
NEM – What you need to know
New Economy Movement (NEM) started off with the ambition of making sure digital currency distribution was widespread and fair. It is one of the few altcoins whose concept is to address all the inherent issues affecting cryptocurrencies such as Bitcoin. Issues such as scalability, energy consumption, ease of use, incentive to use, consolidation of power by miners and governance are what NEM seeks to address.
NEM: Revolutionary peer to peer crypto platform
Launched in 2015, it brings plenty of exciting new ideas to the blockchain.
As with many cryptocurrencies, NEM developers are pseudonymous and it was started by a Bitcoin Talk forum user called UtopianFutur. The inital design was a fork from NXT, but it swiftly got rebuilt from the ground up on its own source code.
NEM has many unique features such as multisignature accounts, encrypted messaging system, and the Eigentrust++ node reputation system. One of the major advantages is its transaction speed. It is for these reasons it is generally viewed as an evolving solution, replete with an outstanding core blockchain technology. The cryptocurrency that runs on it is called XEM.
NEM is primarily used in Japan, but also elsewhere in the world.
|0.000001||µXEM (microXEM) – smallest unit|
|0.001||mXEM (milliXEM) – thousandth unit|
|Date of introduction||2015|
|Genesis Block Production||Fixed 8,999,999,999 XEM total|
Block time 1 minute
Proof Of Importance
One of the key aspects of NEM is its unique consensus mechanism of Proof of Importance. This looks to overcome the problems that can be found in the Proof of Stake model by identifying an account’s overall support of the network. It does this by accounting for three factors: vesting, transaction partners, and number and size of transactions in the last 30 days.
NEM has a feature called harvesting. It doesn’t require any special hardware, you do need to have at least 10,000 vested XEM coins in a single wallet. Anyone running Supernodes and processing transactions get paid by processing the payments for the network. The advantage of harvesting over mining is that it uses a lot less electricity, which means lower transaction fees. This also means that, NEM is much a more energy-efficient cryptocurrency and better than the environment than a coin like Bitcoin (See our post on Bitcoin’s energy usage).
It’s used in a commercial application, called Mijin in Belgium.
Other than that, NEM is still in the early stages and the only real thing you can do with XEM is transfer between people and wallets; there isn’t yet any tangible things you can buy with it.
Buying and Storing
You’re going to want to download the NEM Nano wallet to your PC or mobile phone, and follow the instructions to set it up.
To purchase XEM, you’re limited to a few exchanges right now. Bittrex allows you to purchase XEM with BTC, USD or ETH.
Proof of Importance
How does it work?
PoI solves this dilemma by assigning consensus addresses and an importance score. The importance score can be thought of as a reputation score (kind of like Karma on Reddit). A higher score means the network trusts you more to verify transactions.
In PoI, your chance of verifying transactions isn’t entirely dependent on how much you have to stake. Instead, it’s based on the number and quality of transactions you’ve previously done.
What is a quality transaction?
Well, simply sending yourself a bunch of XEM between addresses isn’t going to do it. You must have sent at least 1000 XEM to addresses holding at least 10,000 XEM staked within the last 30 days.
One risk of Proof of Stake is that people simply hoard as many coins as possible and reap the rewards from block creation. This concentrates wealth while discouraging transactions. These transactions are what keeps the network running. PoIs importance score means that hoarding results in a lower score. Spreading XEM around increases the score. Therefore, being an active participant pays better than hoarding.
What keeps it secure?
You may think that it’s pretty easy to hold a few addresses, pass some XEM between them and shoot up your own importance score, however, the algorithm attempts to prevent this. One way in which it does so is by actually lowering the importance score for accounts that transfer out, then receive XEM. Also, making everyday purchases or sending XEM to an exchange won’t affect your importance score.
Dash – a fork of Litecoin – includes the features of Litecoin (limited supply, 2.5 minute block times, proof-of-work (POW) validation system) along with the ability to transact instantly, via an instant send feature, and anonymously, via a private send feature, and to vote on updates to the network. This is implemented through a two-tiered validation system. The first tier involves the traditional mining/POW system from Bitcoin, Ethereum, Litecoin, and many others. The second tier includes a network of Masternodes which are required to maintain a minimum of 1000 DASH. Each node that maintains this minimum is deemed a Masternode that participates in confirming transactions instantly, anonymizing transactions by mixing public keys so you don’t know who the sender or receiver are, and voting on updates to the network. In exchange, the Masternodes receive rewards of about 2 DASH to every Masternode per week.
Pros: Contains many of the benefits of Bitcoin including decentralization, immutability, and limited supply; two-tiered system allows for very fast (~ 1 second) and/or private transactions for users willing to pay an additional fee as well as governance where Masternodes can vote on updates to improve the network (e.g., such as increased block sizes to improve scalability); fungible – due to the anonymity associated with the private send features, unlike Bitcoin where coins used in illegal transactions may be “marked”
Cons: Two-tiered system can lead to centralization as the cost to operate a Masternode of 1000 DASH is prohibitive to most; several competitors in the daily transactions space (Bitcoin Cash, Litecoin, Nano) and in the privacy coin space (Monero, Zcash, ByteCoin); private send feature does not fully anonymize transactions and they can be traced to previous transactions that were not anonymized; attempts to address multiple problems (transactions speed, anonymity, etc.) with one coin, whereas multiple coins focus on each of these problems individually and arguably in a better way
To perform an objective analysis, each cryptocurrency is rated based on the following factors: (1) validation method; (2) leadership; (3) community participation in development; (4) transaction volume and market capitalization; (5) industry participation; (6) security; (7) usability; (8) technical features; (9) growth; (10) legal risks; and (11) estimated time of arrival.
Dash uses the same proof-of-work (POW) system as Bitcoin to validate transactions, but a different mining algorithm in X11. Originally, miners could run X11 on CPUs but hashing power has increased considerably and now requires ASICs. As described above, Dash has a second tier made up of Masternodes that perform decentralized governance by voting on updates, mix transactions to anonymize them, and instantly validate transactions within a second as opposed to about 2.5 minutes to validate a transaction via the first tier POW system. Masternodes receive 45% of the block reward (currently 5 DASH per block), miners obtain another 45%, and the remaining 10% goes to the treasury system for development. Each Masternode has 1 vote for updates to the network. If a threshold number of Masternodes vote in favor of the update then it is enacted. In other systems like Bitcoin and Ethereum, updates to the network are made through a fork where the chain splits into two. Miners effectively vote for the update by continuing to validate transactions from the old chain or moving over to the new chain. However, this voting occurs after the fork, so the developers can add an update which does not end up being enacted if the miners continue to devote computing resources to the original chain. In Dash’s Masternode governance system, updates are voted on before they are added into the protocol.
Dash is led by its creator and lead developer Evan Duffield and the Dash Core Team, a company made up of about 30 employees. Duffield has received some criticism for the release of Dash where almost 2 million coins were released due to a bug when the code was forked from Litecoin. Although Duffield claims that the community did not want him to relaunch or perform an airdrop, some suspect he did this on purpose to ensure he would have a significant portion of the coins. In this manner, he could control the network through the use of Masternodes by running a large percentage of them and voting for his own proposals and against proposals that did not directly benefit him. To be fair no one knows how many Masternodes are owned by Duffield or members of the Dash Core Team.
Transaction Volume and Market Capitalization
Dash is 13th in market cap (~4B) with a transaction volume of about $130M per day.
A few online retailer and businesses accept Dash such as Dash Video Casino, Organic Contraband Coffee, and a few other small companies. Additionally, it can be purchased through several exchanges, such as Bittrex, Binance, Bitfinex and many others. There are also Dash ATMs in select locations throughout the world. However, Dash has yet not received widespread acceptance and may only be used at very limited locations.
In terms of security, Dash has many of the same advantages and disadvantages as Litecoin. Some argue that the second tier of Masternodes leads to additional security vulnerabilities, because the large cost (1000 DASH) of running a Masternode prohibits individual users or small entities from participating. Thus, only large entities may be able to run Masternodes which can lead to centralization. On the other hand, currently there are over 4700 Masternodes running on the network and while some speculate that the Masternodes are owned by a few entities, it seems more likely that there are at least a thousand owners. Accordingly, it is unlikely one company can take over the network or a hacker can attack one company that owns thousands of Masternodes and gain control.
Like Litecoin, Bitcoin Cash, and NANO, Dash is intended to be used for day-to-day transactions. With the advent of the instant send feature, transactions can be completed in less than a second which allows for very fast cash like transactions. Additionally, Dash can be used with an element of privacy due its private send feature. There are many reasons why someone would want to transact privately. For example, on the Bitcoin network hackers and thieves may identify the wallets with the largest number of coins and target them.
As described above, Dash has many of the same features as Litecoin. The main difference is its second tiered network of Masternodes that performs decentralized governance and instant and/or anonymized transactions. Decentralized governance allows for the Masternodes to vote on updates to the network (where each Masternode has 1 vote) before they are implemented into the protocol. For example, Dash has dynamically increased block sizes through these updates during periods of high transaction volume. Though this seems to be more efficient than alternative mining systems which fork the code to perform an update, critics argue that a user or company, such as Evan Duffield or the Dash Core Team could control the voting power and thus, the network by owning enough Masternodes. Furthermore, unlike Monero the transactions executed by the private send feature are not fully anonymized. For one, they can be traced to previous transactions that were not anonymized. Additionally, the private send feature is a coin mixing service based on CoinJoin. The coin mixing service breaks down transactions into specific dominations of 0.01, 0.1, 1, and 10 DASH, mixes the denominations with similar denominations from other users and includes several outputs to each person’s wallet at a different address called a change address.Though the senders are anonymous in this implementation the transactions are not. Other privacy coins such as Monero utilize Ring Confidential Transactions to anonymize the transactions themselves.
Being in both the daily transactions and privacy coin arenas, Dash has many competitors including Litecoin, Bitcoin Cash, NANO, Monero, ZCash, and Bytecoin. Nevertheless, Dash does set itself apart via its two-tier system that allows for decentralized governance and by providing both privacy and daily transactions features in one coin. If only a small percentage of altcoins survive in the long term as many have predicted, Dash may be one of them since it implements multiple features.
Estimated Time of Arrival
Dash launched in 2014 and is now fully developed and ready for use. However, the Dash network has not been tested to the same extent as Bitcoin’s.
The two-tiered network sets Dash apart in a unique way and allows for even more features to be implemented through its decentralized governance. Nonetheless, as Dash has not yet shown it is the best at any single feature (e.g., daily transactions, privacy), users may prefer coins that can focus on and perfect individual attributes within cryptocurrency over one that addresses several.
All You Need to Know about Ethereum’s Move to PoS
Ethereum’s move to PoS: radical shift from PoW to PoS
Ethereum, the world’s #2 cryptocurrency, with its impressive capabilities, has become a force to be reckoned with in the cryptoverse. One of its few criticisms, however, is it’s current mining method, PoW. That, however, is set to change. In this post we will explore Ethereum’s move to PoS.
With the first release of Casper, Ethereum will transition from pure Proof of Work (PoW) to hybrid PoW/PoS. According to Buterin “In this scheme, all of the proof-of-work mechanics will continue to exist, but additional proof-of-stake mechanics will be added”.
The main reason why PoS is seen as a necessary development is, of course, the need to reduce the energy requirements of PoW blockchains like the current versions of Ethereum and Bitcoin. A recent report claims that Bitcoin mining consumes as much power in a year as 159 countries, which is clearly far too much, and Buterin admitted that today’s Ethereum isn’t any better than Bitcoin in that respect.
As Ethereum prepares to make a radical shift in its Blockchain consensus algorithm from Proof of Work (PoW) to Proof of Stake (PoS), here is a brief overview of all that transpired till now – and the changes that are planned.
So, what is Ethereum?
Ethereum was created in 2013 by the Russian-born programmer Vitalik Buterin when he was just 19. In basic terms, Ethereum is a distributed public blockchain network that runs smart contracts. For an in-depth analysis, check out our article on Ethereum.
Just how Bitcoin mining earns Bitcoin, in the Ethereum blockchain, miners work to earn Ether, a type of crypto token that fuels the Ethereum network. Ether is a tradeable cryptocurrency which is also used to pay for transaction fees and services on the Ethereum network by application developers.
Ethereum’s ultimate aim is to grow into a decentralized world computer that replaces server farms. Imagine it as one computer that can be used by the whole world, which cannot be turned off. Each update of Ethereum is planned to align this mission. So, every stage is designed to help Ethereum to scale while adding new features and improving security and user-friendliness of the platform.
The road till now – the 4 developmental phases of Ethereum
There are 4 development stages for complete launch process of Ethereum. They are as follows:
We will now look at each in turn.
Phase #1 Frontier: This was the first live release of the Ethereum network. Launched in July 2015, this phase introduced the mining of Ether and started building dApps and tools.
Phase #2 Homestead: This happened in March 2016 and was the first production release of Ethereum. This phase introduced many protocol improvements. These became the foundation for improving transaction speeds and for future upgrades.
Phase #3 Metropolis: This phase focused on building a lighter, faster and more secure Ethereum. It includes two hard forks – Byzantium and Constantinople.
Phase #4 Serenity: This would be the final phase wherein the long-awaited Proof of Stake (PoS) using Casper consensus algorithm will be brought in.
Ethereum’s move to PoS: why move from PoW?
The short answer – to reduce the power consumption of the Ethereum network and avoid enormous waste of energy. Proof of Work (PoW) and Proof of Stake (PoS) are both algorithms for reaching consensus on the blockchain. However, the approach is quite different.
In PoW, miners attempt to solve complex mathematical problems, which requires massive computing power and electricity. There are disadvantages like the possibility of 51% attack in PoW protocol. On the other hand, in PoS protocol, the miner putting up a stake – basically locking up an amount of their coins – to verify a block of transactions. So, the higher the stake, more the percentage of blocks that he can confirm.
Ethereum currently uses PoW algorithm and plans to move to PoS protocol shortly.
Casper – Ethereum’s PoS Protocol
Casper is the name given for the ‘proof-of-stake’ protocol for Ethereum. It is actually a combination of two research projects – Casper the Friendly Finality Gadget (FFG) and Casper the Friendly GHOST: Correct-by-Construction (CBC). They are referred to as Casper FFG and Casper CBC. The final form of Casper is expected to draw from learnings from both FFG and CBC.
Casper FFG: Nicknamed as Vitalik’s Casper, this is a hybrid POW/POS consensus mechanism. Here, there is a PoS protocol overlaying on top of the normal ethash PoW protocol. So even though blocks are still going to be mined via POW, every 50th block is going to be a PoS checkpoint wherein finality is assessed by a network of validators.
In short, Casper FFG PoS system on the current PoW chain to create a PoW/PoS hybrid and it focuses more on a multi-step transition to introducing PoS for the Ethereum network.
Casper CBC: This is being developed by Vlad Zamfir. Casper CBC is intended to replace the current PoW system used by Ethereum so that the main chain produces blocks through PoS.
Casper could be a part of the Constantinople hard-fork of Ethereum’s Metropolis phase. This hard fork may be likely to occur between 2018 and 2019 to ensure that Ethereum would be resistant against Bitmain’s powerful Ethereum miner named the Antminer E3. For more information about Ethereum Casper click here
Casper is pretty close, sharding number one priority, Buterin recently said at a conference in Singapore.
Ethereum’s move to PoS in the Serenity Release
Ethereum plans to move from 100% PoW to 100% PoS in the Serenity release. Developers have programmed a difficulty bomb into Ethereum’s Blockchain so that PoS Ethereum Blockchain would be supported. This is expected to eliminate any confusion on which chain to follow – the chain with PoW or the chain with PoS.
Casper is expected to fundamentally change the way the Ethereum network functions – hopefully helping Ethereum scale new heights!
Ethereum: where PoW falls short, PoS is expected to thrive
In conclusion, Ethereum’s move to PoS will be beneficial for the following reasons:
- As no mining, in its traditional form, will take place, the issue of unnecessary energy wasting will be forgotten about.
- No competition in solving computational puzzles will mean no demand for advanced mining hardware. Therefore, more people will be encouraged to participate in the validation process.
- PoS will make attacks on the blockchain even more expensive, despite significantly reducing energy costs. If anyone decides to buy up 51% of ether to try to alter transaction blocks, they’ll have to pay millions of dollars to get the coins (due to limited supply and increased demand ether price will be increased drastically) and then risk losing their money by destabilizing the very blockchain they’ve put their funds in.
20/04/2018 – it was announced at a developers meeting on 20th April that the Ethereum Casper consensus protocol is ready for review. The Ethereum Improvement Proposal (EIP) 1011 – also known as Hybris Casper FFG (Friendly Finality Gadget”) – is the long-awaited code that will serve as a bridge in the transition from the energy-soaking proof of work (PoW), to a safer, less power-intensive proof of stake (PoS). This process is called “minting”, and it is meant to be more environmentally friendly. EIP 1011 developer Danny Ryan reported, during a meeting, that the code is “ready for reviews and community discussions, etc.” He also stated testing phase for clients using the Ethereum blockchain would begin soon. “As these pieces of the puzzle are getting closer to being completed, I’ll signal that it’s time to start talking about fork block numbers.”
10/05/2018 – the release of the first version of the Casper “Friendly Finality Gadget” has been announced. Danny Ryan, the developer behind the Casper protocol update announced its first version on GitHub. This upgrade will help the client, auditors and other external parties to integrate the source code into their software more easily as explained by Ryan: “v0.1.0 marks us more clearly tagging releases to help clients and external auditors more easily track the contract and changes.”
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