Ethereum's Difficulty Bomb: All Smoke, No Fire?

Sometime in the future (we can't be certain when), ethereum will likely switch from its proof-of-work consensus algorithm to Casper, a proof-of-stake system its developers are now in the throes of completing. While this may sound like a slight change to those who are unfamiliar, altering this one parameter will have an outsized effect. When the protocol change happens, the ethereum blockchain will hard fork, meaning that, for a short period of time, two networks – the old and new – will exist simultaneously.

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At that point, the goal for ethereum will be to persuade the majority of its users to upgrade to the new proof-of-stake-powered blockchain. Otherwise, ethereum risks winding up creating another blockchain, as it did when a past technical update created ethereum classic.
On the surface of things, getting the companies that use the ethereum network to switch should not be a problem. After all, proof of stake promises to be faster and more scalable, and to consume far less energy than proof of work.
To most of the ethereum community, Casper sounds like a great deal. Unless, of course, you are a miner.
That's because proof of stake doesn’t rely on mining. Rather, it gives the job of creating the next block to those who own tokens on a blockchain – a move that essentially puts miners out of a job.

Time bomb

But, two things could go wrong with ethereum's big switch.
One would be if Casper does not work as planned. In this case, ethereum could simply delay the switchover. The second is if miners continue mining the old chain. But ethereum has always had a plan for that – something called the 'difficulty bomb'.
Baked into ethereum shortly after the network launched, the difficulty bomb was created to make mining a block increasingly difficult over time. The slowdown is set to happen gradually at first, but will spike upward after the launch of Casper.
When mining requires more work, miners are not able to produce as many blocks. The block time gets longer and, as a result, miners earn less and less revenue. Eventually, the network just becomes unusable.
That is the plan, at least.

Miner concerns

As ominous as all that sounds, however, miners don't appear too concerned.
Jonathan Toomim is co-founder of Toomim Brothers, a cloud mining company that has a high percentage of its business invested in ethereum.
Toomim told CoinDesk that, right now, the difficult bomb mainly effects his purchasing decisions. Any hardware he buys has to pay for itself before ethereum updates to Casper.
Toomim also pointed out that, if and when mining ethereum does become unprofitable, he will simply switch to mining other coins, like Zcash or ethereum classic, that use a similar mining mechanism.
But that right there could be a problem for ethereum.
If enough miners leave the network before ethereum switches to proof of stake, that could impact the security of the main ethereum blockchain – the one that most of its users are still active on at the time.
Toomim though made it clear he intends to mine altruistically, saying:

"We will switch to mining more profitable coins as long as the survival of ethereum is not threatened. That is, assuming that a hard fork is performed as planned either to enable proof of stake or, worst case, to delay the bomb, we will mine something else."

History of the big freeze

Ethereum's difficulty algorithm started with this core commit in August 2015 in the 'Frontier' patch, the first release of the ethereum network.
At that time, ethereum's then-CCO Stephan Taul wrote in a blog post that, starting from block 200,000, mining would become progressively more difficult. So much so, that by the end of 2016, an 'Ice Age' would occur, meaning a point when the network freezes up.
But less than a year later, in June 2017, that Ice Age got delayed, partly to allow more time for the development of Casper.

“Why would you stick with the network that is increasing block times?”

Ethereum co-creator Vitalik Buterin wrote on Reddit: "With the change in the difficulty adjustment algorithm brought about in the last hard fork, the Ice Age will come very slowly indeed."
How slow? The difficulty adjustment happens every 1,000 blocks.
Currently, block time is averaging 14 seconds, but for the last year, it has been inching up to 15 seconds. And, according to calculations made by Buterin three months ago, that number will double to 30 seconds by mid-August of this year.
Block times could be as high as 14 minutes by 2025.
A block time of 30 seconds may not sound like a lot to some, especially when compared to bitcoin's block time of 10 minutes, but to clients running apps on ethereum, that slowdown could get annoying.

Chill attitudes

 

 

 

Still, some ethereum users say the temporary slowdown is worth putting up with, because proof of stake will ultimately be much faster.
Zack Coburn, the lead developer at FirstBlood, a gaming platform that runs on ethereum, said he's not fussed.
He told CoinDesk: "We don't rely on extremely high frequency transactions, so a brief period of 30-second block times wouldn't be a major concern."
Some have a different opinion, though.
Rick Dudley, a blockchain developer who contributed to Casper, thinks any change in block time is a huge deal. And if the block time climbs to 2 minutes, the difficulty bomb will seriously impact businesses.
"Yeah, I think that is pretty crippling. Two minutes from 15 seconds is extremely painful. I think it is easy to misinterpret how bad that really is," he said.
He points out, though, that the bomb is only going to hit when there is already a viable alternative: proof of stake.
In this light, Dudley he said he feels ethereum won't have a problem getting users to upgrade, concluding:

"If the choice is between the proof-of-stake network that is lowering time and the proof-of-work network that is increasing block times, why would you stick with the network that is increasing block times?”