Basically switching from proof of work to proof of stake.
Currently the Ethereum network is overloaded and can’t handle the amount of transactions that are made on it.
For Ethereum to function it is relying on the work of miners solving complex computer equations to run the network. In return for solving a “block of transactions” they get rewarded in Ether, the gas (or currency) to run the network on. This way of running the network is called ‘proof of work’ (PoW).
The problems with this is that it isn’t the most efficient way of running a blockchain, because a lot of energy is lost in the process of solving these equations or ‘blocks’.
So a better and more efficient way of running the network is called ‘proof of stake’ (PoS).
Proof of stake
Proof of stake is another cryptographic algorithm that aims to achieve distributed consensus. So with PoS-based cryptocurrencies the blockchain is run by the stake holders. Holding a certain amount of tokens of that particular cryptocurrency.
In the case of Ethereum it might be that the stake holder needs 1000 ether to be part of it. In this process the every ‘stake holder’ is solving a block by itself one at the time. The next stake holder is chosen randomly by the algorithm.
The incentives are that you get dividends annually in the form of ether. Naturally the more ether you are holding the bigger the reward.
This casper algorithm is going to help ethereum’s problem with scalability and obviously making it making it more mainstream adoptable.
Ethereums energy consumption.
Ethereum is using 11 TWh per year you can see on this chart its sitting on number 91 of the list of countries energy consumption.
So with the Casper project they are also able to cut down the electricity power needed to run the network on. This is also very promising because most electricity comes from fossil fuels. Which isn’t helping the environment in a positive way.
So when is Casper coming?
Vitalik Buterin the creator of the Ethereum project said:
“Theoretically, Casper may well be at the stage where we may actually just try doing it for the next fork,” said Buterin, referring to Constantinople, “even if that sounds ambitious.” When moderator Hudson Jameson asked Buterin to elaborate on Casper, Buterin responded, “Hybrid proof-of-stake. The finality gadget.”
Conclusion
So to sum it all up. It’s looking very promising for Ethereum in 2018, if they include the casper update to the network. Another exciting thing what they are working on is called sharding.
Which will make the network even more efficient. But that’s a whole different story but also very promising to look forward to.
