The release of Casper version 0.1 has just been announced, and the crypto community is preparing for major changes. If you've been keeping your ear low to the ground in the Ethereum community, you should be aware of how the project will be switching from a proof-of-work protocol to proof-of-stake.
Let's break this down a bit for the sake of understanding. Proof-of-work protocol relies upon a pool of miners to use their resources to record transactions and create new blocks. These resources include computers, processors and ungodly amounts of electricity.
Miners add to the blockchain by solving cryptographic puzzles to "mine" a block. When one of these complex puzzles are solved, the miner then presents their block to the network to be verified.
As you might imagine, your average Joe doesn't really stand a chance against the massive computer farms that companies and enterprising individuals with deep pockets are able to throw together to mine Bitcoin, Ethereum and other cryptocurrencies.
How Casper works
Casper, on the other hand, now gives any member of the Ethereum platform the ability to create new blocks by replacing miners with validators.
This is how it works: A validator can stake their own coins to validate a block that they feel can be added to the chain. If the block is added to the blockchain, the validator will be rewarded. The bigger the bet, the bigger the reward.
If anyone attempts to cheat the system, punishments will be meted out to the perpetrators. In other words, their stake, the amount they put up to bet, will be slashed.
Casper is designed in a way that protects against abuse of the system by enacting punishments to those who attempt to cheat the betting process. In past POS protocols, malicious elements had virtually nothing to lose. Casper changes all of that.
Keep in mind that there are still possible problems that have people on edge. Individuals with more resources at their disposal can bet more which gives them more control. This will potentially give the rich an advantage over the poor.
It's feared that a small group of highly wealthy individuals will be able to gain control over the system, much like how larger mining pools with massive computer farms are able to "out mine" smaller operations. It all comes down to resources. The more you have, the bigger your edge.
In a sense, Casper is somewhat akin to Plutocracy. Plutocracy occurs when a government is ruled by the elite. In the case of Casper, this will potentially create a semi-centralized platform in which the few have power over the many. Whether this will truly be the case has yet to be seen.
Casper will completely change the way we mine Ethereum. Though it has its pros and cons we can only sit back and wait to see what the future holds.