Summary of the core of the Ethereum system
What is Ethereum
The official definition of Ethereum:
"Ethereum is a distributed platform that can run smart contracts: applications run in accordance with established procedures without the possibility of downtime, censorship, fraud or third-party interference. These applications run on custom-built blockchains , This is a powerful global shared infrastructure that can represent the ownership of property through digital circulation."
Although Bitcoin is the first application of blockchain technology, it is still just a currency. Ethereum brings all the possibilities of blockchain technology. Simply put, the design of Ethereum aims to become the ultimate software platform for future blockchain applications. If decentralization and dAPPs become popular in the future, Ethereum will definitely become the core platform technology in the future.
As Ethereum co-founder Dr. Gavin Wood said:
"Bitcoin is first of all a currency, which is a special application of blockchain. However, this is far from the only application. To give a similar analogy: email is a special purpose of the Internet, and it will definitely help promote , But there are many others."
How does Ethereum mining work?
As of now, Ethereum and Bitcoin are using basically the same proof-of-work protocol (POW). However, based on the application of Ethereum in blockchain 2.0+, POW is no longer applicable. Ethereum plans to transfer to Proof of Stake (POS), and they will use the Casper protocol for this migration.
So, what is the difference between POS and POW?
POS vs POW
POW (Proof of work:): This is the consensus algorithm that most cryptocurrencies such as Ethereum and Bitcoin have so far followed. This means that miners use dedicated hardware (mining machines) to perform mining operations.
POS (Proof of stake): This consensus algorithm will make the entire mining process virtual. In this system, we have validators instead of miners. The way it works is that as a validator, you must first lock up some of your ether (which can be understood as a margin). The verifier will then start to verify the block, which means that if you find any block that you think can be added to the blockchain, you can verify it by placing a bet. If the block is added to the blockchain, you will receive a reward proportional to the equity you invested. However, if you bet on the wrong or malicious block, you will lose your previous margin and related rights and interests.
In order to implement "Proof of Stake" Ethereum will use the Casper protocol.
Casper is a security-deposit based economic consensus protocol (security-deposit based economic consensus protocol). The nodes in the agreement, as "bonded validators", must first pay a deposit (this step is called a lock deposit, "bonding") before they can participate in block generation and consensus formation. The Casper consensus protocol restricts the behavior of validators through direct control of these deposits. Specifically, if a validator does anything that Casper considers "invalid", his deposit will be fined, and the right to generate blocks and participate in consensus will also be cancelled. The introduction of margin solves the problem of "nothing at stake", which is the low cost of doing bad things in the classic POS protocol. Now there is a price, and validators who are objectively proven to have done something wrong will pay this price.
At the beginning, Ethereum will be a system of mixed consensus algorithms, in which most transactions still use the POW method, and a small number of them use POS (the POS mechanism will be used for every 100 transactions).
Benefits of POS proof of stake
• Reduce overall energy and capital costs: Bitcoin miners around the world spend approximately $50,000 in electricity bills per hour. This is 1.2 million US dollars per day, 36 million US dollars per month, and about 450 million US dollars per year! By using "Proof of Stake", you can completely virtualize the entire process and cut off all these costs.
• No dependence on ASIC: Since the whole process will be virtual, it does not depend on who has better equipment or ASIC (application specific integrated circuit).
• Make 51% attacks harder: 51% attacks occur when a group of miners gain more than 50% of the hashing power. Using POS can resist this kind of attack.
• No malicious validators: Any validator who locks their funds in the blockchain will ensure that they will not add any wrong or malicious blocks to the chain, because this means that they will lose all their investment in shares.
• Create block: Make the creation of updated blocks and the whole process faster.
• Scalability: The blockchain is scalable by introducing the concept of "sharding" (more on this later).
Although there have been various simple arguments about the POS consensus mechanism before, the difference between the Casper protocol and other protocols is that it inspires honest miners and punishes dishonest miners. If you put your investment on a malicious block, you will lose all your investment and income: this will punish anyone who doesn't follow the rules.
"Imagine 100 people sitting at a round table. One person has a bunch of documents, each with a different transaction history. The first participant picks up a pen and signs it, then passes it to the next person to make similar choices People. If each participant signs the transaction history logged by most participants, each participant will only get $1. If you want to make a small move, sign on one page, and then sign on the other page, you House will burn down,"