The Beginner’s Guide
Casper is an application that will eventually turn Ethereum into a Proof of Stake (PoS) blockchain. (also known as Ethereum 2.0). Although Ethereum was launched as a Proof of Work blockchain in the summer of 2015, the developers were planning a long-term transition to the staking model. Once the migration is complete, mining will no longer be part of the Ethereum network.
To date, there have been two co-developed Casper applications in the Ethereum ecosystem: Casper CBC and Casper FFG. The CBC version was originally proposed by Ethereum Foundation researcher Vlad Zamfir. While research on CBC initially focused on PoS protocols for public blockchains, it has evolved over time into a broader field of study encompassing various PoS models.
Research on Casper FFG is led by Ethereum co-founder Vitalik Buterin. Initially, a hybrid PoW/PoS system was proposed, but evaluations are still ongoing to implement this system, and a pure PoS model may be preferred as a result of new proposals.
Notably, Casper FFG is the feature that is scheduled to launch the launch of Ethereum 2.0. But this does not mean that Casper CBC will never be used. In fact, Casper CBC could be used to replace or supplement Casper FFG in the future.
While both versions were developed for Ethereum, Casper is a PoS model that can be adapted and applied to other blockchain networks.
How Does Casper Work?
The transition from Ethereum 1.0 to 2.0 is called the “Serenity” update. This update will consist of three phases. In the first phase (Phase 0) a new blockchain called Beacon Chain will be operational. Casper FFG rules will create the consensus mechanism of this new PoS-based blockchain.
Unlike PoW mining, where miners use expensive and specialized machines to create and verify transaction blocks, the Casper app will extract the mining process from Ethereum. Instead, verification and confirmation of transaction blocks. It will be done by the block validators who will be selected according to their shares.
That is, each validator’s voting power will be determined by the amount of ETH stakes they put out. For example, someone who deposits 64 ETH will double their voting weight compared to someone who deposits the minimum amount of shares. In order to become a block validator in the first phase of Serenity, users will need to reserve at least 32 ether (ETH) shares. This amount will be invested in a private smart contract based on the earlier Ethereum blockchain (1.0).
If all goes well, random committees of validators will be selected to generate new blocks, and block rewards will be given to them in return. Block rewards will likely consist only of transaction costs, as there will be no block premiums.
However, we need to point out that each PoS application may include a different approach and a different rewarding model. The Casper model is still under development and has many details that need to be clarified.
One of the advantages of Casper is that it will help make Ethereum eco-friendly while enabling stakes. The demands of PoW systems are very high when it comes to electricity usage and computational resources. On the contrary, the requirements of PoS models are much lower. Ultimately, once a full PoS model is implemented on Ethereum, miners will no longer be needed to secure the blockchain, so the amount of resources needed will be much lower.
Another advantage of Casper is regarding security. In essence, Casper will be used as a selector and will be responsible for ranking blockchains. In essence, it will act as the bookkeeper of the Ethereum 2.0 registry. So if a validator acts maliciously, that person will be quickly removed and punished. In exchange for not following the rules, the validator will be penalized with its stake (in ETH), meaning violating network rules will be very costly. However, the developers are still in the process of evaluating the 51% attack possibilities.
Finally, some argue that Casper will provide Ethereum with a higher level of decentralization. For now, those most powerful in the network have the resources to run their mining operations. Anyone who can afford enough ether in the future will be able to help secure the blockchain.
Casper has a long way to go before it is fully developed and implemented. Currently, its efficacy and safety are still not proven. It has many details that need to be determined and regulated. Nor can we be sure of how it will look and behave until it goes partially live in Phase 0 of the Serenity update.
In terms of theoretical limitations, Casper will not be able to finalize blocks if Ethereum’s verification system fails. Casper is not fully resistant to 51% attacks in its current configuration. Apart from this, an official specification is still needed to determine a fork rule that may be needed in the face of attacks.
Ethereum is moving away from mining to a stake system where users can stake ether (ETH) to a deposit address to secure the blockchain. Casper is also a technology that will be used to finalize blocks to enable this change.
Casper will help create the foundation on which future Ethereum 2.0 developments will be built. And it will make the transition to the PoS model smoother. In addition, the open-source nature of blockchain also means that Casper’s benefits can be permanently forked, modified, and used by other projects to build on.
When Casper is officially released, it will mark an important milestone in Ethereum history. Regarding when Casper will launch, Ethereum researcher Justin Drake talked about the possibility of Casper’s first phase coming out on January 3, 2020 (Bitcoin’s 11th birthday). However, this is only an estimated date. Casper could be launched any time in 2020.
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