Bitcoin and Ethereum both currently operate under a Proof of Work protocol.
Ethereum is moving from Proof of Work towards Proof of Stake under its new “Casper” protocol.
Despite its many benefits, the drawbacks of Proof of Stake have prevented its widespread adoption.
Casper aims to solve Proof of Stake’s drawbacks, resulting in an improvement over existing Proof of Work and Proof of Stake protocols.
The updated protocol improves the long term outlook of Ethereum’s valuation.
An overarching problem that cryptocurrencies must address is called the Byzantine General’s Problem. The Byzantine General’s Problem essentially simplifies down to: How do you prevent data from being corrupted or falsified in a network where there are nodes that have economic incentive to lie about the data?
In application to cryptocurrency, the problem boils down to preventing attackers from lying about a coin’s ledger, given the economic incentive of doing so. We need a way to form consensus on the ledger because anyone can create a block, while we only want a unique chain, so we want a way to decide which block to trust.