ETH, the booty call

ETH, the booty call

By Spitkitten | cryptokitten | 10 Sep 2020


Ugh. It's been a bit of time since my last post, where I bemoaned my flagging relationship with Ethereum,  got some great responses -- my fave being from @stackingcats, re: keeping ETH as a booty call.

It's not only funny -- it's wise. And here's why.

Gas fees haven't budged. 

But Ethereum 2.0 (ETH2) still looks awesome.

In terms of one of my other token suitors (handsome, slightly boring, reliable Tezos), I finally figured out staking (and baking), and the concepts are also good jumping off point to untangle why I'll keep ETH's number in my phone.

ETH2 is going to do a few things to ETH, but most importantly, it's going to change the entire mining and validation ecosystem of ETH from Proof of Work (POW) to Proof of Stake (POS). 

This is cool. 

POW currencies, like Uncle Bitcoin, require huge outlays of energy and equipment to mine and validate. Computer rigs race to hash -- to be the first to identify and solve a complicated algorithmic equation. 

The winner gets to validate the block on the blockchain, and is rewarded with the currency. 

Losers get nothing. A huge energy bill.

And the "older" Bitcoin is, the most Bitcoin is found, getting closer to the finite number of Bitcoin...the harder the hash is to solve, the more power needed to mine, and the rewards are smaller (going down every ~4 years...remember the woe about Bitcoin halving?). Not a lot of incentive, and a huge outlay of finances, for everyday folx to do anything but buy BTC.

Takes a lotta the pow! out of POW. IMHO.

But, hell. I'm not even trying to mine anything, unless you count that daily click I do for the not-yet-existing Pi. So POS mining isn't even the sexiest bit -- though it is the flashiest -- nor will it be the thang that saves ETH for most folks (though in a few, you'll see why even non-miners will like POS for ETH).

What could? 

Scalability, baby.

POW systems have scalability limits, as well as limits on how many transactions process per second. Currently, ETH can process approximately 15 transactions per second. That sounds like a lot, but given all the dApps running on ETH and the fact that it's the number 2 crypto behind Bitcoin, which makes it a likely candidate in which to conduct any transactions, shit gets bottlenecked up real quick.

ETH2 will implment shard chains.

Shard chains are like parallel blockchains that sit within Ethereum and take on a portion of the network's processing work (https://ethereum.org/en/eth2/#shard-chains

Then beacon chains, kinda like toll booths (minus the toll) will validate the shards. Validators report new blocks of transactions to the beacons, which then make that block information available to other shards, which then report to others -- and they tell a friend, and they tell a friend -- until there is network-wide consensus.

More transactions can happen faster. 

And, then...you see it coming?

Fewer bottlenecks and more blockchain vroom vroom mean -- along with the lower cost of mining to begin with, that gas fees -- which are, well, bounties we pay to "...compensate for the computing energy required to process and validate transactions on the Ethereum blockchain…" -- should go down*.


* Should. No guarantees in life. But logic is logic. We may still see relatively "premium" fees for, say, transactions done during, I dunno, peak rush hour times, and that we could pay less for low-priority transactions that can just queue up, or push through during off times. Spitballing


Lower gas fees mean we can breathe again on the ETH network.

The suckage is that this won't happen tomorrow. Or next week. For the hodler, or those of us who have a modicum of trust in places that owe us small payments in ETH (like, ahem, kaff kaff here), hanging tight onto what we have, and waiting until the gas fees drop somewhat before cashing out is...OK. Not ideal.

But booty calls are rarely ideal, else they'd be more than a booty call. Right?

I've looked around a bit, and can't find any solid gold plated info that says what I think is gonna happen will happen. If you know of any credible sources that validate or dispute my claim, hit me up in the comments. I'm also interested in your speculations. Give it to me, my people.


Spitkitten
Spitkitten

Nerd, bon vivant, sci fi writer. Dynamite with a laser beam.


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