The future of mining: Is Ethereum on the edge?
As the world’s largest cryptocurrency in the world, Ethereum has long been synonymous with decentralized applications (Apps) and smart contracts. However, on its innovative surface, there is a complex ecosystem that is highly based on a critical component: mining.
For those who do not know, mining refers to the process of validating transactions on the Ethereum network and adding to the blockchain in exchange for the newly created ether (ETH). The mining process provides an intensively calculation mathematical puzzle to resolve transactions and create new blocks. This highly energy intensity activity was a contradictory issue among the cryptocurrency fans, many who ask for more sustainable solutions.
A decrease in mining
In recent years, the mining difficulties of the Ethereum network have increased exponentially, making miners increasingly difficult to solve complex puzzles over time. Consequently, the management costs of the mining platform have risen to the stars, so that most people and organizations are not valid. According to Coingecko, Ethereum MainNet decreased by more than 40% over the June 2017 peak.
Bitcoin assessment of this decrease has beyond consequences. Without mining, the network would struggle to maintain a coherent block time, which is currently set up for 15 seconds. This would lead to a waterfall effect where:
- Transaction commissions increase : With fewer miners and less computing power, speed processing speeds and commissions would increase.
- The speed of smart contract slows down : As smart contracts are based on the Ethereum network, constant validation and updates are required for proper operation. The main delay can hinder their performance.
- Interoperability Problems : Other blockchain networks may have difficulty integration to Ethereum, which can lead to a fragmented ecosystem.
Mining is required?
While mining remains necessary to protect the Ethereum network, its role in the system develops. Some potential alternatives include:
- Participation Test (POS)
: This contribution algorithm currently used by polkad and other networks includes validators who hold a certain amount of ETH to “focus” their position before voting on new blocks.
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- Hybrid consent : This approach combines the elements of POW and POS, with a combination of test mechanisms (POW) and power-of-of-of-pous (POS).
Conclusion
Like the world’s cryptocurrency leader, Ethereum is an intersection. The increasing difficulties of mining eventually lead to decline and force developers to investigate alternative solutions. While mining remains essential to protect the network, it is clear that the system is at the peak of change. As long as we continue, it will be interesting to see how Ethereum develops and if new contribution algorithms arise to replace or integrate traditional extraction methods.
Sources:
- Wikipedia: Bitcoin
- Coingacko: Ethereum (AHU)
- Elderscan: Mining difficulties