What is the Ethereum (ETH) Casper Upgrade?

Casper will make the Ethereum consensus a hybrid PoW and PoS, allowing the network to process millions of transactions per second.

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The Ethereum Casper Upgrade will solve the Ethereum scaling problem. The upgrade will make the Ethereum consensus a hybrid PoW and PoS, allowing the network to process millions of transactions per second.

Casper was first published last year and a first version was released earlier this year on May 8.

One of the biggest problems that Ethereum faces is that of scalability. The cryptocurrency even though ranked behind Bitcoin is more useful in the cryptocurrency space.

However, slow transaction speed has affected the network, making people doubt whether cryptocurrencies can actually compete with or replace fiat currencies.

Ethereum was using proof-of-work (PoW) but decided to develop a protocol that will combine the parameters of two algorithms – Proof-Of-Stake (PoS) and Proof-Of-Work (PoW). This new protocol is called Casper – Friendly Finality Gadget (FFG).

Difference between Pow vs. PoS

For PoW, miners buy real computers that consume energy and calculate blocks at a rate proportional to costs.

In PoS, however, the validators would purchase virtual coins inside the system (in this vase Ether). The coins would be converted into virtual computers calculating blocks.

Using PoS, the probability of signing a block doesn’t depend on an individual’s processing power, but on the number of coins on the account of a user-validator.

The two Ethereum Casper protocols

The first protocol Casper FFG was developed by Vitalik Buterin, Ethereum’s co-founder.

Casper FFG was implemented first and is designed as a hybrid of the PoW and the PoS mechanisms.

Finality means that once an operation has been completed, it will forever be etched in history and nothing can revert that operation.

The second protocol, which was developed by Vlad Zamfir is called Casper CBC. It makes use of what is known as a correct-by-construction protocol.

As has been stated, Vitalik’s Casper is going to be implemented first to ease the transition from POS to POW. Vlad’s Casper, on the other hand, is going to derive a safety proof via the utilization of an ideal adversary.

Once Casper is activated on the network, ethereum will use a hybrid consensus algorithm that combines elements from both PoW and PoS.

Initially, consensus will primarily be achieved through PoW, though PoS will gradually take on a heavier workload in subsequent releases.

Ethereum believes that everything that is wrong with their network can be attributed to PoW, which is why they moving to PoS.

In Casper protocol, any validator who acts in a malicious/Byzantine manner will get immediately punished by having their stake slashed off.

This property makes Casper different from other PoS protocols. Since malicious elements have something to lose, there will always be something at stake.

Sharding

Perhaps the most important attribute of Caper is that it helps scalability. It does this by enabling sharding.

Sharding will make processing faster by splitting a state into different shards. Once the scalability issue of Ethereum has been solved, then the network would be able to handle hundreds of thousands or millions of transactions per second.

Casper will also help Ethereum achieve decentralization. In recent months a fundamentally new problem has emerged for PoW.

The arrival of super powerful ASIC miners in the market has become a serious threat for decentralized networks, as they increase the chances that one of the mining pools will occupy a significant share of the hash and make the network centralized.

Proof-of-Stake makes this completely irrelevant by making mining completely virtual.

What to expect from Casper

As a scalability solution, Casper remains an important blockchain upgrade and solution for both developers and ordinary users.

With an increase in bandwidth, more transactions are expected to be processed at higher speeds, which means that big companies will be able to build complex structures and develop ecosystems on the Ethereum network.

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