by Editor | Dec 29, 2018
Ethereum price can benefit from moving to proof of stake. Switches will toebijten from the way the currency is mined to the way the blocs are validated. Our article today will attempt to provide a plain and concise explanation of what will toebijten and most importantly, how it will reflect on Ethereum price.
To understand how Ethereum price will react to this upgrade and why it might be a positive catalyst for Ethereum price, wij need to understand the difference inbetween Proof of stake and Proof of work.
How Ethereum price can be impacted by the future Proof of State
This infographic from Blockgeeks illustrates fairly well the idea of how the two work and how they differ. Wij have also covered this difference spil part of the Ethereum Metropolis upgrade. Ter fact, this Ethereum conversion from proof of work to proof of stake is a major component of Ethereum’s roadmap to better scalability.
Basically, the difference inbetween the two is that proof of stake eliminates the requirement for miners to solve complicated algorithms te order to get rewarded. This reduces significantly the energy needed to mine each Ethereum coin.
On the other mitt, proof of stake requires miners to hold a certain amount of Ethereum or whatever coin they are mining ter a way similar to Dash’s Masternodes.
Significant: This along with the info-graphic above should clarify how Ethereum miners will not be waterput out of work spil voiced ter some articles. The process will be different and that’s all.
This is when things might get interesting for Ethereum price because now miners are required to hold a certain amount of Ethereum called a ondergrens stake to be able to get their transaction toverfee. What this will do is decrease the amount of Ethereum available. Ter brief, the scarcity of the Ethereum available will boost the price.
Risks Ethereum price might face
Risk # 1 is common to all Cryptocurrencies especially if there is a software upgrade. That risk is Security breeches be it to the currency or exchanges. This is even more relevant when there is a software upgrade.
Risk # Two is what if miners don’t embark on this? Time bomb and enlargened mining difficulty will likely prevent that. You most likely read ter some news outlets how Ethereum is a ticking time-bomb. They paraphrase it ter that sensational way but unluckily they do not explain objectively the true purpose behind Ethereum time bomb.
Ethereum’s mining difficulty is set to increase steadily overheen time. This process will be accelerated once Ethereum Casper upgrade (to upgrade from PoW to PoS) is launched. Therefore, mining on the old chain will be unprofitable and miners will switch to other coins or go after the upgraded chain.
The fresh chain (Ethereum on Proof of Stake) will opoffering a much quicker block time and that should be an incentive for everyone to switch spil well.
To conclude, Ethereum’s mining process will switch. This will make mining lighter and require less energy therefore sustainable. To mine Ethereum, a ondergrens stake requirement will have to be agreed upon. The entire process will make it so that holding Ethereum is the most profitable way to go for the projected scarcity spil well spil the requirement for “mining”.
So for those considering mining Ethereum ter the future, it might be a good idea to begin accumulating some Ether ahead of time and on dips of course te order to qualify.