What is Proof-of-Work and Proof-of-Stake?
Proof-of-Work and Proof-of-Stake are two of the most popular consensus algorithms in cryptocurrencies. They are different in their limiting values for the reliability of the work done.
Proof-of-Work (PoW) is an algorithm for solving complex mathematics problems. It’s a great method for protecting distributed systems from abuse (DoS attacks, spam mailings, etc.), the essence of which boils down to two main points:
- The need of making complex and lengthy tasks
- The ability to check the result quickly and easily
For adding a verified block to the blockchain, the miner receives a reward in the form of cryptocurrency. PoW tasks are not originally intended for humans, their solution requires large computing power, but they are always achievable in a concrete time. Also, important to keep in mind that verification of the obtained solution requires much less resources and time.
Proof-of-Stake is a method of protection in cryptocurrencies, in which the probability of the formation of the next block in the blockchain by the participant is proportional to the share that the accounting units of this cryptocurrency belong to this participant from their total number. So, the PoS mechanism is better protected from abuses and hackers. The also idea of proof-of-stake is to solve the problem of proof-of-work associated with high energy consumption.
Ethereum net merge
Merge will be carried out in two stages: first, the initial version of the blockchain consensus layer is created, then the merge takes place. The consensus layer was created on May 30, Merge Ropsten, Ethereum’s public testnet, is scheduled for June 8.
Anthony Sassano, co-founder of the Ethereum research tool EthHub, said that the public testnet running through Merge is the last step before the merger takes place on the main Ethereum blockchain. If everything will work as it must, Sassano estimated that the merge on mainnet could happen as early as August but stressed that this is his own guess and no official timeline has been presented.
What does it affect?
The final transition to Ethereum 2.0 will mean the end of mining on the Ethereum network using video cards. Miners will be replaced by validators who stake to validate and secure the network and are rewarded with ETH. These changes are expected to drastically reduce the amount of electricity consumed by the Ethereum blockchain.
It will also cut the issuance of new ETH by around 90 percent, which many analysts believe could lead to a noticeable increase in the price of the coin amid falling supply. At a minimum, there will be much less new ETH in circulation.