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Here, we provide a guideline on the Difficulty Bomb – one of the features integrated into Ethereum that describes the increasingly difficult levels of the mining algorithm which miners need to solve to get rewards on the blockchain.
Ethereum (ETH) is regarded by many as the queen of cryptocurrencies to Bitcoin’s (BTC) king, and there is a good reason for that. While it might not be the pioneer, the developers learned from Bitcoin and created a better blockchain. In fact, the popularity and increase in the value of its native token, Ether, is primarily due to the wide use of the Ethereum network for dApps and smart contracts. One of the features integrated into Ethereum is the Difficulty bomb. Here, we explain everything you should know about Ethereum’s Difficulty Bomb.
‘Difficulty Bomb’ is the term for the increasingly difficult levels of the mining algorithm which miners need to solve to get rewards on the Ethereum blockchain. To understand this, it is first necessary to point out that Ethereum is a proof of work (PoW) blockchain. This means members of the network have to solve mathematical puzzles to prevent compromising the network. By solving these puzzles, they validate transactions on the network. In return, they are rewarded with tokens. It is this whole process that sums up cryptocurrency mining.
At the initial stages, the puzzles are usually straightforward to solve and require very little computing power. But as the blocks of transaction increase and more miners join the network, more computing power and energy are needed.
With the Difficulty Bomb, the puzzles get more complex with time making it more difficult for miners to solve them. This, in turn, means the time between the creating new blocks after validation of transaction will increase. The result of this is a lag on the Ethereum blockchain.
The more complicated the puzzles get, the more time miners have to work to earn rewards. This makes mining unattractive economically since the energy and computing power will increase while the rewards decrease. This is referred to as the Ethereum Ice Age, and it will mark the beginning of a shift from Proof of Work to Proof of Stake protocol.
The first time the Difficulty Bomb concept came up was in 2015. At that time, Stephan Tual, former Chief Commercial Official at Ethereum, mentioned it in a blog post announcing the first Frontier patch. According to him, starting from the creation of the block 200,000, there will be an exponential increase in the difficulty, increasing block resolution time. Besides, this is how the blockchain will switch to PoS from PoW in time for the final milestone phase, Serenity.
The protocol was finally introduced on September 7, 2016. The effects of the protocol were expected to be evident by December 2016, when block verification on Ethereum would be at such snail speed that it would seem the network was frozen. However, this did not happen at that point. Vitalik Buterin explained these delays in a Reddit post, where he stated that the ice age would take some time before it happens. He pointed out that it would take till 2021 before the real effects of the difficult bomb become obvious.
In October 2017, there was another hard fork to the Ethereum network where it moved to the Byzantium phase. It was necessary to delay the difficulty bomb for 1.33 years as part of the upgrade. When the network got an upgrade to the Constantinople phase in February 2019, the ice age was further delayed.
In January 2020, the Muir Glacier upgrade delayed it again for another 4,000,000 by activating the EIP 2384. This delayed the difficulty bomb till July 2021. Still, once more, the difficulty bomb has been postponed to December 2021. By that time, Ethereum block time will rise from 13 to between 20 and 30 seconds if another delay does not take place. The ETH2 Finality gadget has not yet launched.
So far, there have been four delays to the launch of the Difficulty Bomb. According to the developers, ETH1 and ETH2 will be ready to merge by December 2021. If that happens, the difficulty bomb will not be a problem as the network will move from Proof of Work to Proof of Stake protocol.
But if things don’t go according to the plan, we might expect to see another delay to the difficulty bomb with the Shangai fork in October 2021.
With all these delays, it appears that the only true solution to Ethereum’s Difficulty Bomb is for the Ethereum network to switch to the Proof of Stake protocol. However, as long as it is still using Proof of Work, the difficulty bomb will continue to see delays. If not, the lags will affect the functionality of the network in general.
PoS system appears to have many advantages. The token holders get all the benefits by simply staking funds on blocks and validating transactions instead of the miners having more power. It is also more decentralized, which is a big positive for Ethereum. Another significant advantage here is that it requires less power. And this is very important when energy consumption for mining cryptocurrencies is becoming a major issue.
The Ethereum Difficulty Bomb, technically called EIP 3554, appeared back in 2015. It was primarily aiming to speed up the development of ETH2 and switch to the Proof of Stake system by making mining less profitable. So far, it has seen several delays, and from the look of things, it will not launch until Ethereum switches to PoS.
The EIP 3554, commonly known as Ethereum Difficulty Bomb, is the term that describes the increasing difficulty in solving mining algorithms which will increase block time, thereby causing lag on the Ethereum network and making mining less profitable.
Ethereum Difficulty bomb was created to determine who may wish to continue with Proof of Work after the Ethereum blockchain switches to Proof of Stake so as to prevent a fork on the Ethereum blockchain, which might happen if all miners don’t switch.
The Difficulty Bomb will make puzzles more complex, increasing the time needed to solve them, which will increase the time needed to create a block, thereby making mining less profitable.
Yes, it is possible to remove the difficulty bomb but doing that will require a network upgrade. So far, there have been arguments on why it should be removed, but there is nothing concrete yet, and it appears it will not until ETH2 is fully live.
The dangers of the difficulty bomb are that if it is launched before the Proof of Stake system is fully in effect. It could lead to serious lags on the Ethereum network. There is also the possibility of a blockchain fork if all miners don’t switch to PoS even after the Difficulty bomb is launched.