Crypto Terms: Letter C

What is Casper (Ethereum)?

Casper (Ethereum) MEANING:
Casper (Ethereum) - Casper – a protocol aimed at converting the Ethereum network into a Proof of Stake (PoS) blockchain.
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Let's find out Casper (Ethereum) meaning, definition in crypto, what is Casper (Ethereum), and all other detailed facts.

At the moment, the existing Proof of Work (PoW) consensus mechanism of Ethereum is being replaced with a better version – the Proof of Stake (PoS) mechanism.

Ethereum Casper is a protocol that combines PoS and PoW consensus mechanisms. The PoW part, which uses the Ethash algorithm, is the same as what we have now. However, Casper the Friendly Finality Gadget (FFG) is a new consensus technique that is used in the PoS part.

Casper FFG's ultimate goal is to replace PoW mining with PoS mining. This means that those who mine Ethereum using hardware at the moment will be able to help validate and secure the network without having to invest in additional expensive hardware.

The Difference Between PoW and PoS

PoW relies on computational processing power while PoS relies on token-holder deposits to achieve consensus. 

Besides, PoW is based on the premise that miners have to compete to solve a complicated cryptographic puzzle. The first person to solve the riddle receives a reward as well as the ability to create a new block on the blockchain.

On the other hand, PoS requires miners to lock up some of their money as stakes, instead of competing against one another. A block validator is chosen randomly based on his/her personal stake weight (the number of coins staked).

The Benefits of the Casper Protocol for Ethereum

  • Energy Efficiency. One of the main benefits of switching to PoS is that it will save electricity. In the long run, this will result in a regulated and sustainable increase in the amount of Ether in circulation.
  • Reduced Environmental Impact. PoS systems demand less effort to validate transactions, which means miners don't need as much high-powered hardware or money for electricity. This results in reduced costs and a smaller environmental footprint, which is especially crucial given that Bitcoin mining consumes more energy than many countries.
  • Increased Scalability. Every transaction in a PoW network must be validated by every node before it can be completed. PoS employs a different validation approach, allowing Casper to execute more transactions per second, resulting in quicker and less expensive transactions.

The Implementation Phases of the Casper Protocol

  • Phase 0: Beacon Chain. The PoS concept is introduced to the Ethereum blockchain in this phase. Beacon Chain is a new blockchain that is meant to run in parallel to the current Ethereum blockchain version. Beacon Chain is intended to be used to coordinate validators without having accounts or executing smart contracts.
  • Phase 1: Sharding. This phase is meant to provide massive scalability by separating the Ethereum network into numerous shards, each capable of processing transactions in parallel. The Ethereum network can currently process roughly 15 transactions per second (TPS). Sharding would allow it to process thousands, if not millions, of TPS.

The Casper protocol's ultimate goal is to upgrade Ethereum to version 2.0, which is also known as Serenity. Ethereum 2.0 aspires to be quicker, more efficient, and more scalable than its predecessor.