Eth2 is a monumental research effort to create a blockchain that makes no compromises on security, scalability, and decentralization. Given Ethereum is live today, secures a ton of value, and runs a lot of applications, it is almost impossible to upgrade to 2.0 via a simple network upgrade. As such, the project is split into phases. The first phase is a proof of stake chain that runs _in parallel_ to Ethereum today. People can join as validators via a "one-way burn" smart contract. The next phase is then "merging" the state of Ethereum today with this new chain using proof of stake via a docking process. That is, Ethereum will continue to function normally, but mining will be disabled and consensus will utilize proof of stake instead. My implementation of Eth2 is a client called Prysm written in Go here (https://github.com/prysmaticlabs/prysm).
Previous attempts at proof of stake were either too expensive, too centralized, or hard to scale to a large enough number of validators. After many years of research and hard work, and leveraging really awesome cryptography for signature aggregation called BLS (Boneh–Lynn–Shacham), the first phase launched December 1st, 2020 and the current proof of stake chain is now securing over $10bn worth of value at the consensus layer.
A few important things to keep in mind:
- Ethereum development for its future is quite decentralized, with 4 different teams having implemented high-quality, production clients for proof of stake. These teams are independent of the Ethereum Foundation. Most other blockchains have only one, canonical client implementation that has very large majority share
- The "merge" is happening later this year or possibly very early 2022
- The technology used in Eth2 is quite a breakthrough in cryptography and I urge those curious to dig deeper. Using BLS signatures, the protocol can support millions of validators at the consensus layer
Now, assuming every single one of the 110,000+ validators runs on a dedicated machine (which is not the case) and consumes 10 W * 24 h = 0.24 kWh of energy daily, we get an annual energy consumption of roughly 87.6 kWh per validator.
Extending this assumption to the 110,000 validators currently validating on the mainnet, the annual energy consumption of the network would be 9,636 MWh, or roughly 10 GWh annually. In reality, this value is close to a worst-case scenario, as running multiple validators on one machine doesn't affect the load of the machine in any meaningful way. One could run 1000 validators on one Intel-based NUC.
For reference, the current PoW Eth chain consumes roughly 40 TWh of energy annually. Assuming the annual energy consumption of 10 GWh for the PoS chain, the energy usage would drop by 99.975% (three orders of magnitude; E12 -> E9).
Assuming an error of an order of magnitude in the calculations for the PoS chain's energy usage (which would mean running every validator on a dedicated PC pulling a continuous 100 watts, or alternatively 1,100,000 validators), we'd still drop the energy usage by 99.75%.
The benefit of this with the mining algorithm that Ethereum uses is that you can mine with off the shelf consumer parts. When proof of stake is fully switched to, those parts will just be sold on the market.
With Bitcoin, switching over to something like proof of stake will be extremely political and will only work out if the market decides that the new proof of stake blockchain fork is the 'real' Bitcoin. It will be political because miner's mining hardware becomes e-waste so they have an incentive to continue mining regardless of the fork. The only way that miners stop mining Bitcoin is if the blockchain becomes worthless in the market so that the miners no longer can afford to pay their operating costs with the mining rewards.
I don't have an ETH position, but this is my understanding of price action.
https://twitter.com/DocumentEther is a pretty interesting read
There are a number of innovations coming out on smaller alternative chains, but the Ethereum community still seems humble and nimble enough to adopt any of those innovations that work. That combined with its strong network effect make it likely to win.
I'm happy that Bitcoin developers don't experiment with my money, as it's a great inflation hedge right now as it is. Of course I would love some of the innovations that Ethereum made, but it's OK to take things slow, as it's already good enough for 1 thing.
Bitcoin and Ethereum can happily coexist, they both have lots of options to grow, and I don't think either of them is going away.
As far as I can tell, liquidity from every other coin seems to only come from constantly trying to convince people to buy it.
Also, this is about Ethereum not BTC… which is the primary target of tether complaints. Not even the most hardcore conspiracy theorists suggest tether is being used to buy Ethereum.
Edit: I'm asking because this is now mainstream and this is a thought experiment that should be well understood by now. It's hard to get a straight answer about the real world value of these instuments, so I guess I shouldn't be surprised of the [non-]response here. The problem is if questions like this continue to be scoffed at then a lot of people can get hurt.
I want to know how risky this is considering everyone and their grandmothers are investing their retirements [and student loans].
A new bubble in a different area could also cause people to get bored with crypto.
I was hoping for more plausible risks, like "a regulation restricting X" or "innovation in Y."
So I traded the ETH for LTC, transferred it to the other exchange, then traded the LTC back for ETH. My total fee when transferring via LTC was around 30 cents or something like that.
If this is honestly how ETH transaction fees are, this doesn't seem viable...
What am I missing?