Skip to content
Subscriber Only

Bye-Bye, Miners! How Ethereum’s Big Change Will Work

Crypto Currency Tokens As Billionaire Warren Buffett Said That Most Digital Coins Won’t Hold Their Value
Photographer: Chris Ratcliffe/Bloomberg
Updated on

Ethereum is making big changes. Perhaps the most important is the jettisoning of the “miners” who track and validate transactions on the world’s most-used blockchain network. Miners are the heart of a system known as proof of work that was pioneered by Bitcoin and adopted by Ethereum, the platform that supports Ether, the runner-up to Bitcoin as the world’s most valuable cryptocurrency. Proof of work has come under increasing criticism for its environmental impact: Bitcoin miners now use as much electricity as Chile. Proof of stake, which Ethereum plans to phase in during 2022, will be greener and faster. Proponents say the switch will illustrate another difference between Ethereum and Bitcoin -- a willingness to change. 

Cryptocurrencies wouldn’t work without blockchain, a new technology that performs the old-fashioned function of maintaining a ledger of time-ordered transactions. What’s different from pen and paper records is that the ledger is shared on computers all around the world. Blockchain has to take on another task not needed in a world of physical money -- making sure that no one is able to spend a cryptocurrency token more than once by manipulating the digital ledger. Blockchains operate without a central guardian, such as a bank, in charge of the ledger: Both proof of work and proof of stake systems rely on group action to create, validate and safeguard a blockchain’s sequential record.