Where's Casper? Inside Ethereum's Race to Reinvent its Blockchain

If you've been following ethereum at all, you're likely aware the blockchain project has a lot riding on something called 'proof of stake'.

As a result, it's faced heavy criticism from those who long have alleged that both PoS, and ethereum's implementation, might not work.

In late 2015, Bitfury Group released a white paper exploring the differences between PoW and PoS, and the attack vectors that could have destroyed early "Naive" versions of PoS. Yet, against this backdrop, ethereum developers have continued working on an alternative, arguing that they're making headway.

Work has gone through many iterations and materialized in an idea known as 'Casper', after the movie ghost, which ethereum creator Vitalik Buterin has described as "Consensus by bet".

While Buterin's description may sound complex, what the statement essentially boils down to is that ethereum is still seeking to get its incentive scheme for its proof-of-work alternative right.

To recap, proof of work, used by both bitcoin and ethereum right now, requires a network of powerful computers to validate transactions, and proof of stake is another means to this end.

PoS hasn't been easy to implement, seeing several stages of development since 2013, when Buterin stated that ethereum would "Likely" switch from PoW. The first of these stages, which they now call "Naive PoS", suffers from what has been called the 'nothing-at-stake' problem.

They come down to "Crypto-economics," a word often heard in the ethereum community to describe what could be an emerging field of study, focusing on how cryptography can be used to help steer participants in a certain direction with the right incentives.

All in all, the way Vitalik sees it, there are three steps left: finalize the algorithm, review it and build a testnet, and then implement it across all seven of the ethereum clients.

For now, the ethereum community appears eager to see a final version.