The Ethereum Merge that took place on September 15, 2022, heralds a massive upgrade to the blockchain network and addresses pertinent environmental concerns that have been building up around the crypto space for quite a while.
The switch from proof-of-work (PoW) to proof-of-stake (PoS) also has great potential to boost the value of Ethereum, which is currently facing a period of economic uncertainty. With this change, Ethereum transactions can now be faster and cheaper than ever before.
Proof-of-Work (PoW) is a system that requires some work from the person trying to mine the cryptocurrency. This work is verified by other people on the network, and once that is done, the miner is rewarded with cryptocurrency.
Proof-of-Stake (PoS) is a system that replaces the mining involved in Proof-of-Work with a process where people can “stake” their Ethereum and various other cryptocurrencies or NFTs, to qualify for rewards.
This move is unsurprisingly accompanied by its own set of controversies, the biggest of which is the possible centralization of power within the Ethereum network. Volatility is expected in the coming days as experts weigh in on the impacts of this monumental change.
A brief history of Ethereum:
Ethereum was launched in 2015 by Vitalik Buterin, a 19-year-old Russian programmer interested in improving on the fundamental concepts of Bitcoin.
It quickly caught on and became the second most valuable cryptocurrency (after BTC) in market capitalization by January 2018, with a value of $1,151 per ETH.
Over 3,000 decentralized applications (also referred to as “dapps”) are now running on the Ethereum blockchain, with some of the biggest ones being UniSwap, Chainlink, Axie Infinity, and MakerDao.
Why did the Ethereum Merge Happen?
The Ethereum Merge was proposed to address the environmental concerns around proof-of-work cryptocurrencies, with the switch to proof-of-stake intending to reduce the network’s energy consumption by around 99%. Ethereum’s shift to this less-energy-intensive method of operation is viewed as a significant advance towards a greener future for crypto.
What’s going on with the current price of Ethereum?
Cryptocurrencies are known for their high volatility, which makes it difficult to predict how the markets will react after each major event. The Ethereum Merge is no exception. Experts are still trying to understand the full implications of this change, so it’s natural that there will be some skepticism in the days ahead. However, in the long term, we believe this Merge will benefit both the Ethereum blockchain and the overall cryptocurrency market. It is a positive step forward for the Ethereum network and is expected to bring more users and applications to the platform.
What does this mean for Ethereum Miners?
Ethereum miners will need to switch from proof-of-work to proof-of-stake to continue thriving on the network. This will be a complex transition, and it is not yet clear how it will ultimately impact Ethereum’s mining community. Some experts believe the transition could lead to the consolidation of power among a small group of miners, while others think it will create opportunities for new entrants into the Ethereum mining space.
How will the Ethereum Merge impact the Ether you Hold?
According to the Ethereum Foundation, if you already hold Ether (ETH), you don’t need to do anything to accommodate this Merge. But watch out for scams. If an application, crypto exchange, or crypto wallet sends you instructions or recommendations, be sure to verify the sources.
The foundation has also advised everyone to be careful when interacting with Ethereum applications and services. Scammers have targeted Ethereum users in the past, and these scams (particularly phishing) will likely increase in the wake of the Ethereum Merge.
Overall, despite the current state of volatility it has caused, the Ethereum Merge is a step in the right direction. It not only allows the network to increase its potential user base and applications, but also paves the way for others to follow a more energy-efficient path.
*All blogs are opinion pieces and do not necessarily reflect the views of PyxelChain™ Technology Corporation