Currently, Ethereum runs on both proof of work (PoW) and proof of stake (PoS). Previously, it was only a PoW consensus – similar to Bitcoin’s PoW – but Ethereum intends to move away from that algorithm.
The big question on the lips of many is why?
To understand the ‘why’ here is a breakdown of the PoW consensus:
In the proof of work consensus, miners solve complex maths using high-tech computers, and they are incentivized with Ether.
This process helps validate transactions on the blockchain, ensuring the security of assets is guaranteed.
The catch with the PoW algorithm is that miners have to compete in solving the maths – a clear case of if you snooze, you lose.
High-tech, energy-gobbling computers are needed, which is a ‘big minus’ for the PoW. It’s the reason why every environmentalist is calling for the end of crypto.
Proof of stake (PoS) is a cleaner alternative to PoW, which is one of the ‘why’ for Ethereum’s transition. Though the high energy cost of PoW is a major factor behind this move, there’s more to this move than meets the eye.
In PoS, ETH holders will be required to stake their Ether to provide security and transaction validation on its beacon chain. ETH 2.0, as it’s popularly called, will reward stakers for piling their Ether on the chain.
Ethereum’s move away from the computations of PoW isn’t just due to the high energy costs or the fastest answer to complex maths that dominated the algorithm.
The blockchain network intends to do away with the input of miners – Ethereumdevs still see them as middlemen. And PoS makes that happen.
Besides the happy ending of no miners to worry about, Ethereum intends to be the mainstay of dapps on the blockchain. With rival networks springing up – Cardano, Matic, BSC, and ICP – Ethereum’s continuous dwelling on the obsolete PoW puts it out of contention for top destinations of decentralized applications.
So the decision to move away from the comfy yet smoldering hot PoW isn’t just a battle to save the environment or warm its way into the heart of critics, it’s perhaps a battle for survival.
Ethereum developers understand the blockchain’s position in the scheme of things is currently threatened and should they stay put on PoW, Ethereum would play second fiddle in a space they pioneered. That explains the push for the switch to the PoS consensus despite the miners’ resistance.