After a long wait by PC players, Ethereum's merger has finally arrived, a full year behind the original timetable announced by Ethereum. After completion of the merger, Ethereum's ETH will be transferred from PoW to PoS, officially free from hardware dependence.
Many netizens believe that the merger of ETH is a decision made by external criticism and environmental pressure. In fact, there was a clear plan for the PoS transformation of ETH at the very beginning of Ethereum, and the founder Vitalik Buterin has been pushing forward the PoS transformation process according to the plan. Rather, it is because considering the influence of PoW, the PoS process of ETH is delayed for a long time.
With ETH officially converted to PoS, the mining of ETH is no longer linked to computing power, which means that the graphics cards in the hands of many miners will no longer be used in the mining of ETH. This is usdt to pkr. When the merger was completed on September 15th, the computing power and difficulty of the whole ETH network were simultaneously zero. The historic moment that PC players had been expecting for two years finally arrived. With the completion of the merger of ETH, the graphics card market and virtual currency market also began to fluctuate violently.
So what is PoW? What is PoS? How will ETH be created in the future?
From PoW to PoS
PoW, in fact, is short for Proof of Work, which is translated into Chinese as "proof of work". The earliest Bitcoin and the most popular ETH are developed with PoW as the core. As we all know, a virtual coin is just a set of keys with no physical or physical equivalents, so a new certificate is needed to prove that you actually paid a price in order to generate the virtual coin.
How to prove it? The practice of bitcoin is to provide a very complicated calculation formula, and let users spend computer resources to calculate the formula answer. The reward for this answer is "Bitcoin". Many virtual coins born after Bitcoin adopt the same proof method, such as ETH.
The advantage of PoW is obvious. It avoids trust issues and allows every coin that comes onto the market to be actually generated, rather than being illegally generated by the issuer or cheater. However, not all PoW coins are trustworthy, and some issuers quietly leave backdoors in their algorithms so that when the price rises, they can generate a large number of coins for profit.
The most famous example is the Chia coin. It only took one year for the Chia coin to become completely cool. The key reason is that the algorithm of Chia coin was found to have obvious back door, through which the issuer could directly control the quantity of Chia coin. This is true of the Chia coin.
Another disadvantage of PoW is that it takes a lot of resources -- high-performance computing chips, a lot of power, a lot of precious metals (to make hardware) -- to produce a virtual currency that has no real use in the real world. Virtual currency in the form of PoW has been criticized by many environmental organizations, and many countries have also restricted and banned the virtual currency industry on the grounds of energy security and financial security.
With the deepening contradiction among energy crisis, carbon emission, semiconductor production capacity and other issues, virtual coins also need to find a new direction to get rid of the dependence on PoW, and this direction is PoS, which is completely expressed as Proof of Stake (also known as proof of deposit).
What is PoS? For example, ETH under PoW is a factory that emphasizes more work and more pay. Users have to work more to get more pay. ETH under PoS mechanism is a joint-stock company. The more shares held, the more profits the company can gain.
So how do you generate new blocks under PoS? The actual process is rather complicated, so let's take a brief overview. Again, take ETH as an example. All users who hold ETH are "verifiers" on the blockchain, and those who hold more than a certain amount of ETH have the right to propose.
Users who have the right to propose can make a proposal with their ETH as a "deposit". After certain conditions are met, the proposal can be broadcast on the whole network and corresponding ETH holders are invited to vote on the proposal. You can choose to agree or disagree with the block generation, and the block will be finalized after two-thirds of the voting users agree. All users who participate in the block voting divide the ETH generated by the new block based on the amount of "deposit" they have paid.
If someone initiates a malicious proposal to create new blocks with a large number of nodes, the node will be destroyed after other nodes vote no confidence, and the ETH pledged by the node will be directly destroyed. As the total number of ETH decreases, the ETH value of other holders will increase, and the loss of the attacker will be maximized.
Therefore, all honest nodes, except the malicious nodes held by the attacker, will be happy to vote no confidence. Using this mechanism, it is difficult to complete a malicious attack unless the attacker holds more than two-thirds of the voting nodes. Even if the attack is actually completed and the blockchain is recognized, Ethereum can intervene manually to remove the cheating blocks and maintain community fairness.
However, manual intervention will lead to a crisis of trust in the ETH market and directly affect the market value of ETH. If the attack is to obtain more ETH, the attack will reduce the number of ETH and reduce the overall assets. The real loss is not worth the loss.
In addition, even if external forces want to carry out malicious attacks, the first thing they need to do is to purchase a large number of ETH. Only after mastering enough nodes can they launch attacks, and it is highly likely that all the funds invested after the attack will be lost. It is hard to imagine that someone would invest billions of dollars so recklessly for the purpose of crashing the ETH market.
The impact of Ethereum PoS
What will be the impact of Ethereum entering the PoS era? From the perspective of ETH users, they can now bypass the "miners" and directly participate in the settlement of blocks, instead of only benefiting from the ups and downs of ETH. In addition, PoS will be more secure than PoW. For ETH participants, a more stable ETH market also means better investment return prospects.
For PC players, ETH, which is the mainstay of PoW, has moved to PoS, which means that miners no longer need graphics cards, so no one will bid up the price of graphics cards. In the future, users can more easily buy new graphics cards at the normal price. After the merger of ETH, a large amount of computing power began to pour into other PoW virtual coins. However, there is no virtual currency that can replace ETH. Instead, the price of corresponding virtual coins began to fall due to the influx of computing power.
Because the virtual currency itself has no value, its value comes from the community consensus. If you want to prove the value of your virtual currency, it is not enough to say that the computing power is high enough and the amount of coins is large enough. It also needs enough community nodes to maintain the consensus and provide trust guarantee for participants.
In addition, POWs have a 51% chance of being hacked, so most new virtual coins have moved to PoS, while POWs have been gradually abandoned due to the difficulty of retail participation and lower security (Bitcoin is an exception, as a founding coin, Bitcoin's status as a separate coin).
ETH's switch to PoS is definitely a milestone event in the virtual currency market, symbolizing that the mainstream of virtual currency has officially shifted from PoW to PoS, and it is unlikely that PoW virtual currency comparable to ETH will emerge in the future. After all, a large amount of hardware investment cost is not low, and the subsequent operation needs to continue to spend additional costs. Why not directly invest these funds in PoS virtual coins (such as ETH) and wait for the share?
The purpose of investing in virtual coins is to make money. If there is an easy and quick way to make money, then traditional POWs will be abandoned. The only players may be mine owners who have accumulated a large number of graphics cards during the last mining boom.
Therefore, most mine owners have only two options: one is to turn to mining other virtual coins and pray for the virtual coins mined to replace ETH under the debuff which is beyond their income (the income is lower than electricity and other costs); the other is to clear the video card and enjoy life with the money earned or purchase ETH as one of the nodes.
Anyway, the next period of time in the virtual currency market and graphics card market, will usher in a new earthquake.