History of Ethereum mining

In 2013 Vitalik Buterin described Ethereum in the Whitepaper: “Ethereum: A Next Generation Smart Contract & Decentralized Application Platform” and was introduced at the North American Bitcoin Conference in Miami in January 2014. By July 2015 the operation of the Ethereum network started. The cryptocurrency Ether had market cap over 500 Million US-Dollar in February 2016 and two weeks later it was worth over a billion US-Dollar.

For mining Ethereum the proof-of-work (PoW) consensus mechanism is used. So time and computational power is used by Ethereum miners to create a block of transaction to be added to the Ethereum blockchain.

This PoW algorithm was implemented in 2015. But next year a proof-of-stake algorithm will replace mining and proof-of-work.

In December 2020 the beacon chain started officially and for the first time it was possible to realize and generate a return on Ether, without using external protocols.

For staking through a crypto exchange you can use any number of Ether.

In the current stage of development it is only possible to deposit Ether into the deposit-contract and stake it with the help of a validator. It is not possible to withdraw the deposited Ether after. This is going too change with the next update. But you are able to stop the validator voluntary (voluntary exit), which means it is allowed to be offline without having to pay a fine.

So the next step to change towards a proof-of-stake algorithm is the so called “Sharding”. That means hat the network is split into several shards, which is suppose to help with the burden of each node and improve the scalability of the network. This is suppose to happen in 2021. In January 2022 the final step, the “Docking”, will happen. Which means, that the existing network Ethereum 1.0 will be connected with new network Ethereum 2.0 and this will be the official ending of the PoW algorithm.

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