The much-anticipated Ethereum Merge is just around the corner
As the second-most popular digital currency on the market and the undeniable leader of altcoins, Ethereum has garnered a lot of attention over the past few years. Some of it was good, some not so much but Ethereum has always occupied center stage in the crypto environment. Now the Ethereum platform and its native cryptocurrency are getting ready for a major makeover that is set to tackle many of the issues that the network has dealt with over the course of time and bring significant improvements for everyone involved with it.
The only constant is change adage fits the world of digital currencies perfectly, as the industry is centered around evolution and innovation by design, and Ethereum offers a prime example of that. Also, it’s not just the Ethereum ecosystem that will change forever, but the entire crypto sphere is going to be impacted by the long-awaited event.
When it comes to Ethereum, the buzz never ends. There’s definitely no shortage of rumors, theories, and predictions regarding the Ethereum price or the actions and factors that could affect its future. However, the Merge is neither a rumor, nor a distant possibility; it’s a reality that’s happening right now, and we even got a date for it. Developers have confirmed that the Merge will go live on September 15, 2022, so it’s about time to learn a bit more about the upcoming upgrade and what we can expect from it.
What is the Merge and why should we care?
Everyone who has a basic understanding of crypto knows that Ethereum is a decentralized open-source blockchain platform, known mostly for its native token Ether. The terms Ethereum and Ether have come to be used interchangeably even if technically they designate different things. The technology allows users to make transactions, play games, build and deploy decentralized applications, use nonfungible tokens (NFTs), or run smart contracts, serving as the foundation for many tech developments.
That sounds pretty good as it is, so what prompted the need for such a big change and what exactly is the Merge? Upgrades are indeed commonplace in the crypto environment as it continues to expand and evolve. However, the Merge is not a run-of-the-mill update, but a massive overhaul. Initially, people named it Ethereum 2.0 and other variations of the term, but in the end, everyone seemed to agree that the Merge was the best name for the upgrade.
While the Ethereum network has many things going for it, it’s far from perfect. One of the sources of the criticism stems from the negative impact that many digital currencies, including Ethereum, have on the environment, which many believe to outweigh the benefits that these technologies bring to the table. Ethereum, just like many other cryptos on the market, uses a proof-of-work method to verify and validate transactions and support mining activity. And while the system is effective, large amounts of energy are being consumed in the process, becoming a contributor to the already pressing issue of climate change.
Therefore, a shift from the proof-of-work (PoW) algorithm consensus that Ethereum has been using until now to a proof-of-stake (Pos) model has been deemed as the most viable solution by Ethereum core developers, and that’s exactly what the Merge is about. In reality, the idea of using Pos instead of PoW is far from being a novelty. There were discussions on this topic even before Ethereum was launched, so one can say it’s a project that’s been almost 8 years in the making.
Between pros and cons
Technically speaking, the completion of the upgrade implies, just as the name suggests, a merge between the existing Ethereum blockchain, which relies on PoW and everyone currently uses, and the Beacon Chain, based on a PoS consensus layer. After the merge, the Ethereum Mainnet will drop the PoW mechanism and implement the PoS model used by the Beacon Chain.
That means Ethereum will change the way transactions are validated. The new verification process will rely on validators to confirm the legitimacy of transactions. All users can become validators by depositing 32 Ethereum coins and then entering a random selection process that takes place each time a new block is added. Active validators will be able to verify and approve transactions and contribute to the network’s security, thus replacing the energy-intensive framework used by computers.
Apart from creating a more energy-efficiency system – Ethereum’s energy use is expected to drop by more than 99 percent – the upgrade will also provide several other benefits. The PoS will make the platform more decentralized and secure by involving a greater number of validators in the equation. It’s going to be easier to become a part of the network, while speed and scalability will also be enhanced.
The Merge marks a huge milestone in the history of Ethereum, probably the biggest one to date, but its implications extend far beyond the aspects we’ve mentioned above. Ethereum is not just another cryptocurrency on the market, but an innovative technology that underpins many decentralized applications (dApps), decentralized finance (DeFi) protocols, and crypto and NFT projects. Therefore, the upgrade will also have a major impact on all the activities and services deriving from Ethereum.
As was expected, not everyone is happy about the change. While the transition has been welcomed by most crypto enthusiasts, there are voices in the Ethereum community who condemn the move and consider it a huge mistake. Most of the concerns come from Ether miners who worry about their bottom line being affected. But there are other aspects that Rise controversy such as validators becoming targets for censorship or surveillance, or Ethereum becoming more centralized due to a few large entities involved in staking.
It would be naïve to think there are no risks involved in the process, but for now, we can only speculate on how the Merge will translate into reality and wait patiently for the upgrade to go live.