[ad_1]
The implications this move will have on the cryptocurrency market might alter the technology.
A big shift is expected to brace the cryptocurrency market soon. Ethereum, the second-largest cryptocurrency as per market cap, is introducing a new update that will end Ethereum mining as we know it. Ethereum has rolled out a software makeover that includes a code update known as Ethereum Improvement Proposal 3554, also known as EIP-3554.
Since the time the Ethereum blockchain network was launch, its token Ether was subjected to questions about overhauling the way it gets mined. But to address the questions with a big change now will require a push, known as a difficulty bomb. Ethereum’s mechanism functions in such a way that it is extremely difficult to mine, and with EIP-3554 decided to kick off in December, it will essentially make halt all mining functions on Ethereum.
Bitcoin and Ethereum use the proof-of-work mining model, which involves machines solving complex math equations to create new coins. This system makes it impossible for any central body to create new coins, which helps preserve the value of cryptocurrencies. Like Ethereum, Bitcoin also receives flak for its mining process. Mining cryptocurrencies usually demands massive amounts of energy to power the computers that do the calculations. Many environmentalists and critics have questioned this by stating concerns like energy shortages and carbon emissions.
As a solution to this, the Ethereum community has made its mind shift to the proof of stake network which involves users leveraging their existing cache of Ether to verify transactions and mine new tokens. While this will limit the amount of new Ether created, it will also reduce the energy used to run huge crypto banks to mining in the traditional way.
Since December 2020, the Ethereum community has been testing the proof of stake workflow on a chain called Beacon. Ethereum wanted to use this system since the beginning, but the developers pushed back the rollout due to serious challenges. According to Tim Beiko, the coordinator for Ethereum’s protocol developers, Beacon solves these challenges.
“We knew that there would be a lot of technical work to address things like the increased centralization that we see in other proof-of-stake systems,” he said. “We’ve achieved that with the Beacon chain, where there are one or two orders of magnitude more validators than any other proof-of-stake networks.” This migration will be known as Ethereum 2.0, which will make the difficulty bomb more significant.
This isn’t the first time Ethereum is dealing with a difficulty bomb. The bomb was detonated in 2017, 2019, and 2020. When a difficult bomb gets detonated, it fills the system with artificial miners, increasing the mining difficulty and slowing down the appearance of new blocks. But every time this happened, the community has reset its system to bring the difficulty to normal levels.
Why the difficulty bomb?
A difficulty bomb is more of a stoppage method. The bomb forces miners and node operators to upgrade their software after a predetermined amount of time has passed. In December, if the deadline for detonation isn’t pushed back, the bomb will go off, and the crypto market will witness another parabolic rise in difficulty. It will be the start of Ethereum’s proof-of-work “Ice Age.” As this move hits miners, there are some miners who are against this.
Share This Article
Do the sharing thingy
[ad_2]
