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Miners need more and more time to find new blocks. This process shall help to improve Ethereum by switching to Proof of Stake! The difficulty bomb isn't really noticable yet.
Since the beginning of this year the price of ETH increased dramatically. Naturally Ethereum's hashrate and thus it's mining difficulty are following this growth. But if you look into the historical charts you can see that difficulty and hashrate are slowly starting to drift apart.
But in this case the Difficulty is running away and starts with it's programmed increase. It is normal and important for the Difficulty of the cryptographic task for the miners to increase with the hashrate.
This can guarantee a specified blocktime even if the involved computing power is increasing. This is used to fix parameters like coin inflation, transaction speed, etc. But Ethereum is loosing it's balance of diffifulty and hashrate.
The Difficulty is increasing faster than the Hashrate. As result the system is slowing down. Previously the Ethereum Blockchain handled a Blocktime of 14 seconds.
Now it already takes 15 seconds to generate new blocks. This doesn't seem to be that much, but this should be understand as a significant indication!
Simultaneously the number of new created Ether is starting to decrease. In January and February Miners produced around So far the effects of the difficulty bomb are harmless. They are noticable while looking into the numbers, but tey aren't effecting the usabilty of ethereum yet. But the effects will dramatically increase within this year. The Difficulty Bomb is growing exponential! It is expected for the blocktime to reach 30 seconds per block this summer. This will mean the supply of new eth and the network capacity has halved.
In the next month and years the difficulty will increase faster and faster until it become impossbile for the miners to find a block. Than Ethereum will freeze!
Ethereums ice age is no coincidence or mistake. The difficulty bomb was planned by the developers. It is used as kind of a planned obsolescence, which will ensure that a certain Ethereum version will be unusable at some point.
This shall spur the developers, miners and users to improve ethereum by participating on radical changes. The great Hardfork debate we see in the Bitcoin space for more than 2 years now, won't happen to ethereum on the basis of the difficulty bomb. Proof of Stake is environmentally friendly, lowers the threshold for initial investments into mining, allows for lower intervals between the blocks, and is a prerequisite for sharding the blockchain whereby Ethereum shall achieve almost endless scalability.
So it might be worth it to go this way! The Roadmap of Ethereum to switch to Proof of stake seems to be elegant. With the next Hard Fork, "Metropolis", mining and staking will be parallel possible. The Stakers will use a "Caspar" contract to lock Ether and validate blocks. At the same time, the creation of new blocks is further determined by the miners through Proof of Work.
The Difficulty-Bomb will cause that mining will be less profitable than staking at some point. Actually, the Ethereum Blockchain should have been practically unusable since late But the Developers noticed that they had overestimated ethereums progress. It wasn't possible to keep this deadline for PoS.
So with the Hardfork to "Homestead" version of Ethereum, they defused the difficulty Bomb. Vitalik Buterin wrote about a year ago: Then we will have 35 seconds for the next The increase of the difficulty and the blocktime will be more noticable in the coming month, but it is unlikely that effective functional restrictions will occur before spring Currently we are in Homestead, the stage dedicated to the creation of graphic wallets and security.
With Metropolis Ethereum wants to attack the mass market. Parts of this new version will be the introduction of the Caspar Proof of Stake, which is still to run parallel to mining. Only when the Ice Age really hits, Proof of Stake will push out the mining. This will then initiate the Serenity Phase. But while many changes for Metropolis are still complete, the final version of Caspar is still missing and there are still some disagreements.
Therefore the Developers haven't called a concrete date for Metropolis. However, a release is planned in August or September. Until then, the gaps between the blocks will have grown to more than 20, perhaps even 30 seconds.
Casper really is an elegant consensus mechanism with unique and attractive tradeoffs. You should check out Vitalik's posts on Casper's slashing conditions and dynamic validator sets as they both really show the care that has gone into a proper PoS design.
The entire v1 implementation is fantastic - allowing for sharding and transaction finality under dynamic validator sets, the sort that will be seen running full nodes.
The ice age essentially forces the community to come to consensus, and initiate a full node referendum implementing one change: By essentially requiring the network to hardfork at a specific point in time gives certain guarantees about the actions of the network in the future. The ice age removes the doubt. Investors and users know that Ethereum must hardfork in the next few months or the real-world use of the network will be implemented.
This helps ease the worries that surround hardforks - only present because of constant peddling by Bitcoin maximalists. It seems that every altcoin has its difficulties to scaling up, mostly the solution is POS. But it is hard to control the speed of the inflation in POS, so lastly a new altcoin will come to the market for alleviating the problem.
It is just a vicious cycle Cannot describe it any better, because English is not my first language, but I hope, that you can understand, what I am trying to say here. Devcon 3 will take place in early november, Cancun Mexico https: This is super interesting. I'm still learning about how blockchain tech works, specifically ethereum. Solidity seems pretty entertaining so far though.
A very well written post and great explanation of some of the problems Ethereum is facing. I guess we will just have to wait for more info on Metropolis then: Very good info too! If you get the chance you should upvote my latest post about altcoins blowing up! I never thought into the switch this deep but this sure helped. The only reason the hashrate can't keep up is because we can't get video cards right now! No amd gpus in the entire world or else we would still be keeping up with the difficulty.
Hopefully more will be produced soon. I realize that, but I think you misunderstand me. Obviously there will be a point where it's impossible to keep up.
I just don't think we are there yet and us miners would still be keeping up with it if there were any gpus available. It's been over a month since you could buy any real quantity of gpus so that means the hashrate has been stagnate compared to what it would be right now if there were plenty of gpus on the market.
I for one am definitely holding my eth to stake. I realize mining eth won't last forever, but this equipment can be used for many other coins as well. There are plenty of profitable coins out there to mine with these gpus and that should hold true for a good while still so I have no plans to slow down anytime soon.
Plus I find it to be a very fun hobby. This isn't all about profit and margins to me. Ethereum is Entering the Ice Age. Winter is coming The difficulty-bomb is starting to expand. Planned obsolescence for soft switch to Proof of Stake Ethereums ice age is no coincidence or mistake. Ice Age reached Blockchain with Delay Actually, the Ethereum Blockchain should have been practically unusable since late Until than the Ethereum developers should have already arrived the metropolis phase of Ethereum.
The Roadmap of Ethereum consists of 4 phases: Frontier, Homestead, Metropolis and Serenity Currently we are in Homestead, the stage dedicated to the creation of graphic wallets and security. Authors get paid when people like you upvote their post. After reading your post, I see why it is an elegant transistion.
Been involved for a while now! OG Bitcoin evangelicalist right here. D gonna be interested to see the price when Casper comes along.