Robert Steinadler, 6 months ago
A hard fork that results in two different versions of Ethereum is nothing new. In 2016 the DAO hack forced the Ethereum community to take a difficult decision. The result was that the world ended up with two versions of Ethereum. One was the current Ethereum blockchain, which reversed the effects of the hack. The other was Ethereum Classic in which the results of the DAO hack remained in full force. In September 2022 yet another version of Ethereum was born and in this article, we are going to explore its roots.
What is EthereumPoW? Why has it emerged and what is the difference between the fork and the original version of Ethereum?
As we already explained, EthereumPoW is first and foremost a hard fork of the Ethereum blockchain. In September 2022 the so-called Merge was commenced on the original Ethereum blockchain. Its purpose was to transition Ethereum from proof of work to proof of stake. Therefore, miners became obsolete and the reason why this happened was twofold.
First, it was Ethereum’s long-term goal since its inception to move to proof of stake because it is considered to be easier to scale. With more users coming in and Ethereum taking the place of the world’s largest smart contract platform, the step was necessary. The second reason evolved only in the most recent years and is part of the current political debate about climate change. Mining costs a lot of resources and proof of stake does not. Hence the Ethereum blockchain is considered to be environmentally friendly by most blockchain proponents who advocate for a solution that is compatible with climate goals.
This result left one group behind and that was the Ethereum miners. While some were looking for alternatives that already existed others proposed the idea of keeping the old Ethereum blockchain intact and offering a version that simply continues without staking and supports mining instead. This was when EthereumPoW was born. Its blockchain started a few hours after the Merge commenced on September 15 and continues its support for proof of work.
While the explanation given above is correct, there are more details to the story of why the EthereumPoW hard fork found support and the reason why finally a new cryptocurrency emerged. It can be found in the specifications of the mining equipment used in the market and the algorithm that was supported by Ethereum.
Ethereum’s mining algorithm was called Ethash and it supported GPU miners as well as so-called ASICs. An ASIC is a very specific computer designed for only one purpose and that is mining. Such an Ethereum ASIC can only be used with cryptocurrencies that support Ethash. It is estimated that about $5 billion worth of Ethash ASICs were active worldwide in September 2022. Miners who bought GPUs had the option to switch to another network, but mining farms with ASICs were facing serious financial damages. Their hardware was rendered useless with only a few viable alternatives at hand and this created a multi-billion Dollar incentive for them to fork Ethereum and start a new blockchain.
One prominent figure in that context is the Chinese miner and investor Chandler Guo. He became the voice of that movement and of this part of the mining industry that wasn’t willing to sacrifice its investment. When it became clear in the summer of 2022 that the Merge would happen in September, Guo made it public that he would create a hard fork that supports miners.
The most obvious difference is the fact that EthereumPoW supports mining while Ethereum does not. But there is more to it. Ethereum is not just a blockchain that is capable to transfer some coins but a complex network of smart contracts that allows running all kinds of decentralized applications on top of it.
With the fork, all the DeFi, gaming, and NFT ecosystem got forked, too. The problem for EthereumPoW is also perhaps the biggest difference. Who is going to support all those applications? Many projects and companies made it clear from the beginning that they would continue supporting the original Ethereum blockchain and won’t work on any fork that may split from the Ethereum blockchain.
This puts EthereumPoW in a difficult position. While Ethereum has the world’s largest dApp ecosystem and hundreds of use cases, EthereumPoW is still an empty space in comparison.
Of course, this blockchain will most likely create its own communities, protocols, and application, but the gap in user adoption is the biggest difference between both blockchains. It remains to be seen if EthereumPoW can stand the test of time and compete with Ethereum Classic and Ethereum. Both are offering alternatives and with Ethereum Classic proof of work is also safe. With that being said, EthereumPoW is just a few weeks old and at this point, it is hard if not impossible to estimate what the future holds.
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