Ethereum Merger: What Will Change With One Of The Biggest Transitions In Cryptocurrency History?

Ethereum Merger: What Will Change With One Of The Biggest Transitions In Cryptocurrency History?

One of the most relevant changes to date in the crypto-economy universe is upon us. In the coming hours, the highly anticipated Ethereum merger will be completed and the mechanism to support the operation of the second most popular and relevant digital currencies on the market is changing dramatically.

With this merger, known as The Merge, the blockchain Ethereum will no longer work in a “proof of work” model, to work in a “proof of stake” model. The latter has been tested in recent years on a separate blockchain (Beacon) from the one that supported the currency (mainnet). Both are now about to merge. Many doubts remain about the results of the operation.

O success is not 100% guaranteedit is also not certain that the value of the token will consolidate or that an “alternative” Ethereum will not be born, which will adjust the value of the original, but tests were not missing until the last step and the possible benefits are also many .

How does Ethereum work today?

In the current model (proof of work), which is also used with Bitcoin, the computing power of each “miner” or miner is crucial to solving the puzzle, validating a transaction and achieving the reward. Everyone can work on the same complex equations, whoever can solve it first wins. The reward is given in currency, generated by validating new blocks. Ether has so far earned two coins for each validated block (about $3,200, at the current price), plus the fees associated with transactions made by users. In Bitcoin, the reward is higher 6.25 bitcoins per validation.

How will the new model work?

O proof of commitment changes the model of validating transactions and adding new blocks on the Ether blockchain. There is now a random selection process, through which it is decided who will validate the next block on the blockchain. To be eligible for selection, you must have a minimum of 32 Ethers. This new rule is a form of warranty that is starting to take over the system. It is called staking to block the required funds, which will serve as a guarantee reserve, in case the job is not done correctly.

Will the new way of “manufacturing” Ethereum consume more or less electricity?

The most immediate and most relevant change of this algorithm change is precisely in the power consumption required to validate Ethers. A reduction of approximately 99% in electrical energy needed to run the ecosystem is expected as mining is no longer remunerated and thousands of machines around the world have to compete simultaneously for the fastest validation of blocks no longer makes sense .

Today, it is estimated that the carbon emissions associated with Ethereum mining are comparable to those of a city like Singapore. and that the energy consumption of this activity is equal to that of Switzerland, with nine million inhabitants. With Bitcoin, the numbers are even scarier. The 150 terawatt-hours spent annually mining bitcoins is more than enough to supply a country like Argentina, with a population of 45 million.

Are there any other changes planned?

Other restrictions on Eterhum are expected to change after the merger. An update planned for next year will pave the way for acceleration of the maximum number of supported transactions, which will also affect the costs associated with activities in this ecosystem. Transaction delays and fees are two of the problems with the current platform.

Does this change pose security risks to the ecosystem?

The decision to change the essence of how the blockchain works is neither peaceful nor 100% predictable, and it may affect the success of the operation, but it is also not insurmountable. In fact, it has been in the plans of the makers of Ether since the beginning (2014), but given the complexity of the process, it only really started to be prepared in 2020 and many tests have been carried out since then to assess the chances of something happening. goes wrong. However, bugs are a real possibility in transition. Another much-discussed possibility is whether the new system facilitates or hinders possible attacks.

As Jon Charbonneau, an analyst at Delphi Digital, explained to in the current model, to attack Ethereum, someone had to be able to control 51% of the network, that is, from its computing power distributed by thousands of machines around the world. It never happened and is unlikely to happen because of the scale and cost of such a check. On the other hand, the same source recalls that: the captivation system associated with the new Ethereum model would also allow for a direct financial consequence to be awarded to anyone who attempted to attack the network.

Is the continuity of Ethereum guaranteed?

The possibility of those who are not satisfied with the concentration of the new Ethereum operating system in a pool of validators, to create a kind of alternative Ethereum consists. There is even information pointing to moves of this type already underway, but great success is not envisioned for this effort, let alone succeeding the alternative relative to the original. For the coin to have value, there must be an entire ecosystem moving it and it is unlikely that investors and Ethereum-based platforms would prefer to follow the unofficial version.

What will happen to the merger?

The merger culminates in two major updates. The first has already been released and influenced Beacon. The second is coming. It affects the Ethereum execution layer (proof of work) and is triggered by the activation of an algorithm variable during the normal work process.
After the update, all applications and services based on the blockchain are expected to work normally., already compatible with the new definitions. Before D-day, many tests were carried out for this. For example, one of the critical elements of the change is that the various software programs used by the validators are properly updated so that there is a sufficient pool of these actors available to continue validating blocks.

Is Ethereum Worth More?

The answer is not closed. It all depends on how the blockchain update process will go from the start. Beyond. There are people who believe that this new “environmentally friendly” version of Ether will attract many investors, which were far from this market due to the carbon footprint of mining. There are also those who argue that changing the logic of block validation will reduce the pressure to buy and sell the currency, which, combined with the expected improvements in the ability to process transactions, will have a positive effect on the currency. appreciation of the currency.

Watch the video shared by the Ethereum Foundation, where these and other questions about the merger are explained in detail.