Casper and Ethereum’s move from PoW to PoS
To begin with, an introduction to Proof-of-Work (PoW) and Proof-of-Stake (PoS) is necessary. PoW is a consensus mechanism that relies on nodes solving cryptographic puzzles to create blocks and verify transactions. PoS is a consensus mechanism that requires a user to stake a certain amount of crypto to have the chance to verify transactions/create blocks. While PoW has certain advantages and is the first consensus mechanism, there are many drawbacks: energy- inefficiency, centralization, and less security as compared to PoS. Based on these and other reasons, Ethereum had decided to make the switch from PoW to PoS. This switch occurred a few years ago, but this article will cover the challenges of the switch. Overall, the main challenge was the transition: how to actually move from PoW to PoS. After all, Ethereum is a multi-billion dollar cryptocurrency and an error in the transition could lead to its collapse. This is where Casper comes in.
Introduction to the Two Caspers
Casper is the tool that was used to move forward with the transition from PoW to PoS. There are, however, two Caspers: Casper FFG and Casper CBC or Vitalik’s Casper and Vlad’s Capser, respectively. Let’s go deeper into both of these Caspers.
- Casper FFG (Friendly Finality Gadget ): This Casper is a hybrid of both the PoW and PoS consensus mechanisms. The goal is to transition from PoW to PoS, but Casper FFG will simply introduce some components of the PoS system to an overall PoW-based mechanism. To elaborate on that, the PoW model would run normally, but there would be PoS “checkpoints,” where every 50 blocks would be checked by a set of validators.
- Casper CBC (Correct-by-Construction): This Casper is an iterative transition model, meaning that the framework will be built and then improved and added upon slowly. Protocols will be added and the system will be constantly reviewed to ensure that no errors have been made.
While both of these Caspers do seem different, they have the same goal: to transition Ethereum from PoW to PoS.
The Need for Casper
While Casper may seem confusing, there is a definitive need for it. Here are a few reasons for the importance of Casper:
- PoS: Casper is critical to the transition to PoS. Additionally, Ethereum is the 2nd largest cryptocurrency, so changes to Ethereum then would have a profound impact on it later on. Moreover, the PoS model is far better than the PoW one, due to the energy inefficiency and the dollar-for-dollar scale, which promotes decentralization.
- Scaling: As a whole the PoS model will allow Ethereum to scale far better than the PoW one. Also, Casper FFG allows for greater security by having PoS checkpoints, leading to more confirmations. Sharding is another key step along the path of PoS, and Casper’s help to transition towards PoS opens up sharding as a possibility for Ethereum.
- Gradual Transition from PoW: Overall, Casper is meant to be a transition towards PoS, and more specifically, a gentle transition. Ethereum is a huge cryptocurrency, and a mistake in this change could destroy Ethereum.
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