The “Casper” project being worked on by the Ethereum development team is simply a fix for a flawed Proof of Stake (POS) system.
As it stands POS has a major flaw to where if a malicious blockchain is formed anyone can profit off of it essential making cryptocurrency useless in this state and is also known as the “Nothing at Stake” problem, where no matter what you do you can’t lose which is good for those people, but bad for the future of crypto-kind so it can’t happen.
The Casper Project(s) being worked on fix this issue by penalizing members of malicious blockchains, in doing so, also cripples the new verifiers where as they get a rejected share that may not be malicious, will lose their stake.
Proof of Stake disregards miners given the vast amount of resources and electricity they use and focuses on a miner-less verification system.
This works by using general components Processor and RAM to say a transaction is true.
Well what if it’s not true and no miners to verify?
To counter that POS requires you to put your Ether as equity and stake it against the blockchain to prove that you are not malicious and in fact working on the main blockchain – if you’re not you lose your stake, again the flaw of rejected shares in failing hardware can cause this to happen.
Now, Proof of Work (POW) is no better or worse than POS, while argued by devs, the community, miners, and myself, both systems have flaws.
The Casper Project has just removed one of the flaws of one work system and is just a simple idea that some great developers are implementing, it will use less fossil fuels that shouldn’t be used in the first place.
As renewable energy becomes more prevalent there will be less of a need to ‘cut-back’ on our resource usage as a society again making POW more tantalizing as is doesn’t hold the “Nothing at Stake” flaw and simply does not accept malicious blocks therefore making it meaningless for a hacker to waste money manipulating the blockchain for coin that will be rejected by the network.
But truly if one was better it wouldn’t be an argument, there are just varying pros and cons for every party and step along the way.
Also, the Ethereum network sort of requires a large network of computing power for it to exist and until the development team finds a better way to implement POS on the Ethereum network, it will remain the same.
What does this mean for mining?
Most people are investing in GPU miners right now. I’ve investigated mining a whole lot of coins with them and they all sit around the same profit margins SLIGHTLY below Ethereum which took a huge gain over the bull-run and has maintained better than the others giving projected income at this point in time a boost, and theoretically could be more profitable to mine other coins given their future values.
These miners are incredibly versatile and will be profitable on over 90% of ASIC-resistant coins (A few of which don’t even exist yet or are currently being mined).
There is little risk involved but the Casper projects are something we should pay attention to but are not going to just pop-up one day and screw the mining community.
Vitalik Buterin of the Ethereum dev team will first release “Casper the Friendly Finality Gadget (FFG)” which is a hybrid POS/POW system that will hold as more of a warning (assuming POS is ever implemented on the Ether blockchain) and allow us to slowly switch the miners to new coins while the lot that are running will continue to mine Ethereum.
But We LOVE Ethereum!
No problem here, if POS is implemented, by the time it is if you’re mining now will have accumulated a lot of Ethereum allowing you to stake against the main blockchain and perpetually gain more Ethereum from existing Ethereum.
Now, this is something you all need to look into in terms of how much risk you’re willing to take as an individual and if you still agree with the investment after it’s made such a switch from Proof of Work to Proof of Stake.
So, the moral of the story is, there is little risk in terms of cryptocurrency and mining profits* from Ethereum forking to POS (Remember the current Ethereum will still exist and be mineable and the new Ethereum will be the one everyone likes).
There is a chance miner’s may not be able to mine Ethereum anymore, but we already knew that was a risk and am confident that GPU’s will be fine mining other crypto’s.
If this was the case for an ASIC mineable coin, it would be a much more dramatic change and you wouldn’t be able to use the miner at all, but since Ethereum is mined with GPU’s there are a plethora of various currencies you will still be able to mine after a switch to Proof of Stake.
Coins such as DASH, PIVX, LISK, NEO, and many others are already mined via Proof of Stake.
If you plan on continuing to support Ethereum mining after a Proof of Stake switch, I recommend you check out those and get familiar with the process.
Mining POS coins can be profitable because you’ll have your original investment to sell at the end and accumulate interest almost like dividends along the way.
The only risk being taken is holding the coins, as long as their price rises or stays moderately the same, you can profit.
So, make sure you do research on the cryptocurrencies you put your money into and make educated decisions based on research and what you believe in.