The Ethereum community has talked about revamping the way it mints Ether, the asset associated with the Ethereum blockchain, since its inception in 2013. However, persuading individuals to change will necessitate a push, which will come in the form of a hardship bomb.
“It’s a technique in Ethereum that makes it increasingly harder to mine,” Tim Beiko, the protocol developers’ coordinator, explained. “It’s as if we’re artificially increasing the number of miners on the network, which increases the difficulty, making it more difficult for every other miner on the network to actually mine a block.”
Cryptocurrency is still the new kid on the block as an asset class. Bitcoin, the most popular digital asset, has only been around since 2009. Although Ethereum is considered to be the newer entrant in cryptocurrency, it is becoming increasingly popular. Ethereum has had an impressive growth record and is evidently an efficient alternative to Bitcoin. In the recent past Ethereum accounted for 18% of the total cryptocurrency transactions becoming the second-largest cryptocurrency in the world.
Now, Ethereum is set to undergo several changes with regard to its operations as well as mining. In this blog, ChainTechSource will walk you through the evolution and the future of Ethereum mining.
Cryptocurrencies like Ethereum and bitcoin are frequently chastised for the mining process, which is how new currencies are created. Both now use a mining methodology known as “proof-of-work,” in which machines solve hard math equations to generate new currency.
This makes it impossible for any centralized organization to issue new coins at will and there’s no equivalent to a central government printing new dollars, which crypto fans feel helps to safeguard the value of these digital currencies.
Outsiders concerned about energy shortages and carbon emissions have criticized this initiative because it necessitates a large amount of energy to operate the computers that execute the computations.
The Ethereum community has rallied around the concept of switching from proof-of-work to “proof-of-stake,” which compels users to validate transactions and mint new tokens using their existing ether. This will still limit the number of new coins produced, but it will do it without consuming the energy required to power vast banks of computers to solve math problems.
Ether’s Price Rise:
The price of ether has surpassed that of bitcoin, the most popular cryptocurrency, which has “only” increased seven-fold since March. Ether has outperformed largely due to a slew of new features and enhancements coming in the coming months.
Ethereum’s price reached an all-time high of US$1,440 (£1,050) on 19th of January this year. This surpassed a previous high of US$160 billion achieved three years ago, giving ether a total worth (market capitalization) of US$160 billion, albeit it has since dropped to roughly US$140 billion.
Miners may Earn Less:
In Ethereum, miners play an important role as they handle the crucial task of confirming transactions in the blockchain. Till now, miners were paid by Ethereum network for each transaction confirmation otherwise known as gas fees. However, Ethereum 2.0 aims at reducing gas fees, which means the miners will be paid less going forward.
This means that Ethereum miners will lose a major portion of their earnings and since gas fee is the primary source of income for the miners it is difficult to compensate for their losses. Under the new scheme of things Ethereum miners will have to provide stakes using the ‘Proof of Stake’ concept and only those miners with the best value will be paid for confirming the transaction.
Mining to Become More Difficult
PoW mining will be deliberately discouraged in Ethereum 2.0 by making calculations far more complex over time. The London fork dubbed the “difficulty time bomb,” implements a method in which the calculations that computers must conduct in order to validate transactions become increasingly difficult over time. It will eventually lead to an “ice age” in which it will be nearly impossible to overcome the difficulties.
On the other hand, the new improvements will reduce the amount of computational power required for Ethereum mining, as well as the gas taxes, which can currently reach $150 and are a big barrier to developing new platforms based on Ethereum. “Although there’s nothing stopping miners from becoming validators,” Coinmarketcap points out, “one little concern rests in the fact that many of them will have expensive equipment that suddenly serves no function.”
Sharding, which divides the Ethereum network into 64 geographic zones, is another modification in the works. All transactions made within a shard will be processed separately; however, the results will be linked to the other shards in the main network. This helps speed up the network comprehensively. Follow ChainTechSource for more informative content on blockchain technology and for blockchain development platforms.