With Ethereum 2.0, the network will move to PoS and remove the need for mining coins. Periods of high traffic can leave users waiting for hours and even days for their transaction to be added to a block and processed. PoW networks will have a limited block size that can only include so many transactions. As the network becomes more popular, the number of pending transactions increases. This may lead to a centralization of mining power, making it hard for individual miners or smaller pools to compete.ĭifficult to scale. Becoming a miner on a popular PoW system can be challenging for an individual as the mining landscape is often dominated by a few large mining pools. PoW often experiences longer block times and higher transaction fees, making interacting with smart contracts often slower and more expensive.ĭifficult to independently mine. These have to be added to a block and confirmed to the network. Using smart contracts can require a large number of network interactions. While this is one way of securing the network, staking is now seen as a more sustainable alternative. PoW disincentivizes bad actors making large-scale attacks by making it costly in terms of energy. However, PoW has fallen out of favor with some developers and users. To this day, the Bitcoin network still hasn’t been successfully attacked. Proof of Work, as implemented by Satoshi Nakamoto in the Bitcoin network, created an effective, reliable method for achieving consensus on decentralized networks. This consensus mechanism allows miners to reach an agreement without a central authority, even in the face of malicious actors working against them. Since Ethereum’s (ETH) creation, it’s used the same system as Bitcoin (BTC) to generate consensus on new blocks of transactions: Proof of Work (PoW). What is Ethereum’s move to Proof of Stake? First, let’s look at the reasons behind Ethereum’s move to Proof of Stake (PoS). This means that ETH holders won’t need to do anything with their coins and should be wary of scammers telling them they need to “transfer” their tokens.Įthereum’s long-anticipated move to a Proof of Stake consensus mechanism has, for many HODLers, raised an important question: What do I need to do with my ETH? The question is a good one, as the safety of your funds can be at risk if you don’t fully understand the situation. In general, Proof of Stake offers numerous benefits to scalability and sustainability.Īs Ethereum moves to its new sharded structure, the original mainnet’s state will be transferred. Ethereum’s Merge is part of a transition Ethereum from a Proof of Work blockchain to a Proof of Stake.
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