Ethereum blockchain switched to new algorithm mining no longer
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Ethereum blockchain switched to new algorithm – mining no longer works

Ethereum, the blockchain of the second largest cryptocurrency, has switched to the proof-of-stake model, significantly reducing energy consumption. The transition process, started back in 2016, will go unnoticed by most regular network users, but miners’ services will no longer be needed.

    Image Source: Peter Patel / pixabay.com

Image Source: Peter Patel / pixabay.com

The last change to the algorithm began on September 6th when the Bellatrix update was activated. After that, the target value of the Terminal Total Difficulty indicator was reached, which caused the launch of the last Paris update and a change in the network model.

It is assumed that now the consumption of Ethereum energy will decrease by more than 99% – if we evaluate such a transition at the level of the entire blockchain, the transition will be almost like disconnecting Finland from the global power grid. According to the developers, the new algorithm will make the blockchain, which today encompasses numerous cryptocurrency exchanges, lending companies and other services, more secure and scalable.

The miners have been replaced by validators — network members who have pledged at least 32 Ethereum “coins” and sent assets to a business address on the network where they cannot be bought or sold. This work is also rewarded, and pledged tokens work like lottery tickets: the larger the deposit, the higher the probability that one of the tickets will be a winner, and the block will be recorded in Ethereum’s “digital ledger”.

    Image source: Bastian Riccardi / pixabay.com

Image source: Bastian Riccardi / pixabay.com

The first version of the Proof-of-Stake type subnet appeared on the blockchain in 2020 under the name Beacon Chain, but until recently it was a kind of digital proving ground designed for setting up validators. With the transition to a new model, the subnet entered the main blockchain of Ethereum, so the event was called the “merge” (merge).

Despite the fact that many thousands of miners were involved in maintaining the network under the proof-of-work algorithm, machines from the three main mining pools dominated the overall Ethereum hashrate. With the new algorithm, it is not the computing power that is the decisive indicator, but the amount of the deposited assets, which makes attacks even more difficult: Attackers risk the partial or complete loss of collateral.

Critics of the innovation say that with the retirement of mining pools, one cohort of big players will be replaced by another: now more than 30% of the validators’ share is held by the Lido community, and another 30% belong to the largest cryptos Exchanges Coinbase, Kraken and Binance. As for Bitcoin as the largest blockchain, there is no sign of the impending transition to an energy-efficient model in this camp: network participants remain committed to a proven secure system.

In conclusion, it should be noted that the relatively high fees and slow transactions have not disappeared with the change in the Ethereum algorithm, but the creator of the network, Vitalik Buterin, has promised to solve this problem in the future through “segmentation”: transactions are reduced to one Distributing a larger number of so-called “segments” is a process similar to adding new lanes on a freeway.

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About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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