Ethereum’s Transition to Proof of Stake (PoS)

By August 13, 2020March 8th, 2021No Comments
round gold colored ethereum ornament

Note: This post has been written by a WazirX Warrior as a part of the “WazirX Warrior program“.

The Wazir of the cryptocurrency world – Ethereum

Ethereum with a market cap of $43.62B is the 2nd most famous digital currency after Bitcoin. Ethereum went live in 2015 after a crowd sale that took place in 2014. Unlike a fixed coin supply in other digital currencies, Ether’s supply is controlled by members of its community to a minimum value which is necessary to secure the network.

The majority of the decentralized applications are based on the open-source Ethereum blockchain network and it accounts for the highest percentage of total funds stacked on DeFi projects. That being said, Ethereum is currently on the verge of a major shift in terms of its core principle of working, from proof-of-work (PoW) to proof-of-stack (PoS) system.

There has been a lot of talks within the crypto world about this move which was anticipated to happen in January 2020. The current assumption of this transition is expected to happen in late 2020 but haters say, it will be 2021 to never. The new PoS based open-source blockchain is called Ethereum 2.0

What is PoW and PoS?

All cryptocurrencies who works on PoW system needs miners to validate transaction in a decentralized manner. These miners use various hardware to solve complex puzzles to verify the transactions. The first person to solve the puzzle (verifies transaction) gets the reward of doing it via newly mined cryptocurrency the miner is mining.

PoS is another way of verifying a transaction, but unlike PoW, the validator is the one who verifies a transaction where crypto is stack/locked as a guarantee for the rights to verify any transaction. Depending on how many and how long coins were stacked, determines if a validator gets the right to verify the transaction.

Why is Ethereum Transitioning to Proof-of-stake?

The primary and major reason for famous crypto like Ethereum to move from a used and tested system of proof-of-work is the amount of energy used in mining. If we compare, Bitcoin’s mining uses the same amount of energy as entire Australia does. We should not be surprised if Bitcoin moves to PoS in the coming future, because the crypto network is only going to grow from here. 


The implementation which will move Ethereum PoW ( ETH 1.0) to Ethereum PoS ( ETH 2.0) is named Casper. There are 3 phases under which the transition will take place:

Currently, Casper Correct-by-Construction (CBC) and Casper Friendly Finality Gadget (FFG) is introduced by Ethereum community where FFG is power the first phase of Eth 2.0

Future of Eth 1.0 miners

All miners who are currently mining Ethereum will stop the mining after Eth 2.0 is live. This will lead to two possible actions where miners will either sell their hardware in the market or the other one which is more likely to happen where miners will start mining other cryptocurrencies. This will cause a surge in the hash power of other coin’s network.

WazirX Warrior Author: Jay Tanwar

Jay Tanwar is a cryptocurrency enthusiast and supporter of decentralized applications. He is basically from Rajasthan and a Network manager by profession.
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