According to co-founder Vitalik Buterin, the Ethereum blockchain network completed its long-awaited software update on September 15. “The Merge” replaced power-hungry computers with a more energy-efficient configuration utilizing mounds of the network’s native coin. Hence, the move was dubbed “The Merge.” As a result, Ethereum’s energy usage is expected to drop by 99.95%.
In summary, The Merge would decrease Ethereum’s carbon footprint by 99.95% and place the essential infrastructure on a more environmentally friendly route. It took years of research and testing before anything was known since nothing had ever been done in the crypto world. The Merge, however, seems to have gone off without a hitch thus far.
What we need to know
- Critics are comparing the energy footprint of Ethereum and Bitcoin to that of every household in America combined, which refers to the worldwide network of computers needed to verify transactions using the “proof-of-work” protocol.
- Proof-of-work was used in verifying transactions and “mine” new coins across a decentralized worldwide computer network, and both Ethereum and Bitcoin were using it.
- The Merge transfers Ethereum onto a “proof-of-stake” mechanism to validate transactions. This move will be more energy-efficient, thus more economical and environment-friendly.
- Attract more investors and developers.
Issues
- Since it’s less decentralized, it may be vulnerable to attacks.
- Bugs that need to be addressed and fixed.
What happens after The Merge?
According to supporters, the Ethereum ecosystem, which hosts the entire community of NFTs (non-fungible tokens), should operate normally once issues with the Merge are resolved. However, some are still worried about the security implications of a less decentralized network. As a result, developers must update their software to take advantage of this change. Though Ethereum may remain vulnerable to attacks that exploit bugs in Proof-of–Work code, transitioning away from PoW will make it more secure and result in faster transactions and new features and applications being built on top of Ethereum.
Will Bitcoin follow suit?
It’s not probable. Laura Shin, the host of the “Unchained” podcast, says, “Ethereum and Bitcoin have quite distinct cultures, to be honest.” For example, Bitcoiners believe that proof-of-work is a better method of securing the network, even if it is technically feasible to change its infrastructure, as Ethereum just demonstrated. However, Shin also points out that the hash rate on Ethereum is currently much higher than Bitcoin’s, suggesting there may be resistance to making such a change.
Possible effects of The Merge on the market
“The switch to proof-of-stake is expected to cut the quantity of ETH issued per block by around 80%, as well as a result in quicker and cheaper transactions, which may raise demand across the Ethereum network,” Grace claims.
According to experts, the Merge can potentially increase the worth of Ethereum, which is suffering from ongoing issues due to worldwide economic instability. With another Fed rate rise expected next week, Ethereum prices may continue to climb in the coming days and fall. To put it another way, expect more volatility in the future, as is often the case.
Others are more skeptical, while others believe the merger will benefit Ethereum and boost its price significantly. The success of “The Merge” will determine what happens to Ethereum’s price over the next several months. The outcome of “The Merge” will have enormous implications for the Ethereum network and all crypto. Because a significant software upgrade may easily be prone to bugs or technical problems, it’s essential to plan carefully.