Vitalik Buterin: Proof-of-Stake Might Drive Ethereum Miners out of Business

Even though mining today is quite profitable, this industry may fade into oblivion in the long run, Ethereum founder Vitalik Buterin told Russian publication Kommersant.

“When we transition to Proof-of-Stake, the need for Ethereum mining will abruptly decrease at the very first phase. Proof-of-Stake employs an algorithm that doesn’t require many computers to run computations all the time. It’s the algorithm that uses a token within the platform, thus making consensus much cheaper and safer. In fact, it might drive miners out of business,” he said.

Buterin also commented on the risks inherent in cryptocurrencies.

“The biggest risk is financial. Many people have talked about it, and I’m no exception. The market is extremely volatile now. It covers both major cryptocurrencies and ICO projects. This bubble may burst any moment, and the projects would lose a lot of money at once,” he said.

He also believes that exceedingly fast expansion of blockchain acceptance also holds some risks as the technology is not ready to accept this interest.

“This is what is happening to bitcoin. There isn’t enough room in the blockchain, using it becomes more and more difficult, and fees are increasing. Fees in Ethereum are less than $0.01 for now. We’re not going to break Ethereum to pieces like they did it to Bitcoin. There is no need for that, but the risks are still out there,” he said.

Buterin also noted that scam-related risks aren’t off the table as well.

“Any technology can be used for dishonest things. Ours is no exception, unfortunately, as much as we don’t want it to happen. We cannot guarantee 100% safety.”

Looking a little ways down the road, Buterin suggested that fraud schemes where con artists pose as someone else using their data will become more prominent. This kind of scam is almost immortal, Buterin says, and will be out there for a long while. Still, there will be absolutely new kinds of fraud, for instance, competence-related.

“Thus, companies issuing smart contracts may issue one with a deliberate error that would allow them to withdraw all money. There was a recent instance in our community, and thank god it happened on a lesser scale. It allows us to learn and set a mission to mitigate such risks.”

Buterin also noted that fraudulent schemes are becoming more common on the ICO market. Scammers pose fake ICO’s as a real one using fake websites, raise thousands of dollars and disappear.

Byzantium testnet will be launched September 18, which will become a milestone for the upcoming Metropolis upgrade. In a while, another upgrade dubbed Constantinople will be rolled out. The hardfork and the release of Metropolis are scheduled for early October.