In this first part of “Staking and Liquidity on Web3”, the fifth episode of the podcast series between computer engineering prof Robert J. Marks and engineers Austin Egbert and Adam Goad, look at upcoming changes in mining — how cryptocurrency is produced. In Episode 4, the discussion centered on what a decentralized crypto financial system would look like and on challenging new concepts like flash loans and smart contracts. Dr. Marks is the director of the Walter Bradley Center.
A partial transcript, notes, and Additional Resources follow.
Robert J. Marks: Like gold, cryptocurrency like Bitcoin and Ethereum is mined, at least so far. Mining becomes harder and harder as more gold is mined… finding fresh gold deposits becomes more and more difficult the more gold you discover.
In the same way as the supply of a cryptocurrency increases, computers have to solve harder and harder problems to be rewarded cryptocurrency. Investment banker, JP Morgan, estimates that the production cost to mine one Bitcoin today is between $13,000 and $24,000. At this recording, one Bitcoin goes for about $20,000. But famously, the price of cryptocurrency like Bitcoin is very volatile. You know where it is today, but you have no idea where it’s going to be tomorrow.
Robert J. Marks: There is a new approach that replaces mining and reduces costs, especially the use of electricity. The new approach is called staking, something that I’ve just learned about thanks to our guests today, Adam Goad and Austin Egbert. Adam, what does it mean to stake your money today?
How staking is replacing mining for Ethereum
Adam Goad: The one everyone is talking about in the news right now [is] Ethereum. Ethereum is moving from proof of work, which is the mining you mentioned, to proof of stake some…
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