What is the Ethereum Casper Protocol?

The Ethereum Casper Protocol is largely attributed to Vlad Zamfir, one of the most notable developers working on Ethereum.

The Casper protocol has been created  to help Ethereum make the move from a Proof-of-Work (PoW) model to a Proof-of-Stake (PoS) model, while minimising the risks associated with such a development. The proposal will also work as a scaling solution, reduce centralisation and remove what many people see as the resource wastin g PoW.

Issues with Proof-of-Work

Ethereum has always planned to move to a Proof-of-Stake algorithm. Proof-of-Work has had many detractors over the years. The most common criticism is that PoW can be intensive in its energy usage. Rumours have circled that Bitcoin, which uses PoW, is using the equivalent of a small country’s worth of energy in keeping the network secure.

This has been debunked but it is clear where Ethereum and its developers stand on the notion.

Another issue cited with PoW is that it can lead to a centralisation of mining. These issues have plagued Bitcoin for many years with a refusal to increase the block size cited as a reason for fear of further centralisation. Other PoW cryptocurrencies have attempted to combat this by ensuring that they are ASIC resistant.

With Ethereum currently using the PoW algorithm ,they have also suffered from issues of mining centralisation. They hope their move to PoS will solve this.

How is Proof-of-Stake on Ethereum Casper different?

PoS involves validation, proposing and voting, rather than mining. Depending on the size of your holdings, the more say you have on your votes – hence the proof of “stake”. You are rewarded for your stake in Ethereum and the more you stake the greater your reward.

There are some benefits to the move to PoS. It will require less electricity to secure the network. Another positive is that, as voters have a stake in proposals, there is no personal interest in a 51% attack.

PoS will also help with scaling the Ethereum network, as sharding through PoS is much easier.

Questions remain, however, over whether PoS will increase or decrease centralisation over PoW. The proposals show that staking will initially require 1,500 ETH, no small amount. To take part in this process, even at today’s prices ($157), would require holdings of $235,000. For many average users, this is most likely more than they can afford. Vitalik Buterin has said in response that they hope to get the minimum staking amount down to 32 ETH in the long run.

Integration of Casper

Casper is intended to be implemented in stages so as to reduce the risks on the network. The first stage will be Casper FFG which is a mixture of both PoW and PoS. In this case, PoW will still be the main algorithm securing the network but every fiftieth block will be validated through PoS.

The second implementation comes from Vlad Zamfir which will roll out Casper further. This system will rely on what has been termed a “safety oracle” or an “ideal adversary” that fine tunes the PoS system until it’s stable.

Conclusion

Predictably, many Bitcoin maximalists lament Ethereum as a cryptocurrency. The planned move to PoS only heightens this. For them, whilst PoW may have its disadvantages, it still remains the most secure way to protect a cryptocurrency.

Buterin and the Ethereum developers obviously view this differently. For now, there is no right or wrong answer.

The move to PoS through Ethereum Casper has long been one of its main goals. If the system works then they can press ahead with creating further utility for the smart-contract based platform.

New updates such as Casper are vital in an effort for Ethereum to maintain both a technological and market advantage.

To find out more about Ethereum and its roadmap, download this definitive guide.