Ethereum's Proof of Stake Protocol in Review

Of course, in the midst of all this, many positive changes have also been taking place behind the scenes - with Ethereum developers announcing that they will soon update the network's consensus protocol to the eagerly awaited proof of stake algorithm.

Known as the Ethereum Improvement Proposal 1011, developers announced on Friday that the update is part of a long-term plan to move ETH away from the energy-intensive proof of work mining protocol.

As things currently stand, Ethereum makes use of the standard mining consensus algorithm, otherwise known as proof of work.

Ethereum creator Vitalik Buterin and his development team have actively worked towards switching to the new proof of stake model.

The proof of stake model is far less energy-intensive and substantially reduces the risk of a 51% attack on the Ethereum network.

For individuals who wish to participate in Ethereum network validation, moving to PoS will require them to store their ETH in a wallet through the process of 'staking'.

When EIP 1011 comes into effect, Ethereum will take its first steps towards deploying a unique framework that brings together the best of both worlds - an approach that was previously discussed in the company's vision plan.

Miners protest the move as it eliminates a large portion of revenue supporting the Ethereum network.

With this important change coming to Ethereum's consensus algorithm, users need to understand that Casper is not compatible with the existing Ethereum source code; therefore the switch requires a network hard-fork at some point in the future.

While testers and Ethereum developers continue to debate on how this change will affect the network, it is unlikely that the impact can be known until Casper is released on the Ethereum mainnet.