You’ve probably heard of Ethereum 2.0. The project has been known by many names. Now the developers have settled on calling it “the merger”. And the project is almost here.
If you’ve been following crypto news lately, you’ve probably noticed that the world of Ethereum has been more active than usual.
Of course, the price of Ethereum has been stable since the crash and is expected to cross the 3k mark next year. There is also the fact that 95% of NFTs are hosted on the Ethereum Blockchain. And there is also news of Ethereum reducing environmental problems caused by crypto miners.
There is a lot to be excited about if you are an Ethereum user. But all this news is not as important as the upcoming event simply called “the merger”.
What exactly is the merger?
The merge might seem confusing if you are new to the Ethereum world. So let’s start with the basics. For years there has been talk of Ethereum 2.0 or ETH2. Now, Ethereum developers have settled on the name “merger” to describe the important update that will take place on the Ethereum network.
The update will – for lack of a more appropriate term – merge Ethereum with the Beacon Chain. At the moment, both these chains are parallel. However, the Ethereum mainnet is doing all the heavy lifting and processing transactions on the blockchain.
After the merger, the Ethereum mainnet will ditch proof-of-work and use Beacon Chain’s proof-of-stake (PoS) system.
What is the difference between PoF and PoS?
The main consensus mechanisms that blockchains use are Proof of Work (PoW) and Proof of Stake (PoS).
A blockchain that uses PoW requires miners to solve complex mathematical problems to add transaction blocks to the chain. Ethereum has been using this system since its launch.
The advantage of PoW is that it is very secure. However, it’s also very energy intensive, which is why Ethereum’s switch to PoS has been talked about for years.
Under the PoS system, users can stake ETH to confirm transactions and add blocks to the chain. The advantage of this system is that it is much more energy efficient than PoW.
Why is the merger such a big deal?
For starters, Ethereum is the most widely used Blockchain we have today. It powers the second most popular cryptocurrency, which has a $192 market cap at the time of writing. Not to mention it hosts thousands upon thousands of dApps, DeFi protocols and NFTs.
Many people are invested in Ethereum in one way or another. So when the merger happens, it will have a huge impact on the entire cryptocurrency market.
For example, the split will affect tens of thousands of miners. Many will likely have to start mining another PoW coin, which hurts their bottom line by forcing them to buy new equipment.
And since Ether will no longer be provided to crypto miners, the number of new coins will drop by nearly 90%, according to Luca Outumuro, head of research at IntoTheBlock. This slowdown in issuance may help Ethereum eclipse the king of cryptocurrency, Bitcoin, sometime in the next 12 months.
The next step in the development of Ethereum
Many see the merger as a decisive step in the evolution of Ethereum. According to Vitalik Buterin, the Ethereum network is currently “only about 40% complete”. After the merger, about 55% will be completed.
The Ethereum roadmap includes four more development stages happening at the same time:
Each level aims to make the network more stable, faster and most importantly, more decentralized. When the Blockchain is 100% complete, it will be able to process 100 thousand transactions per second.
The merger is just the beginning of a long and exciting journey for Ethereum. So strap in; it’s going to be a wild ride.
Mail Bonus – #Ethereum #merger