Ethereum, the blockchain behind the second-biggest cryptocurrency in the world may soon reduce its carbon footprint by over 99%.
The long-awaited upgrade is scheduled to occur between Sept. 10 to Sept. 20 as announced by the Ethereum Foundation. If it’s successful, we are looking to see a massive 99% decrease in the electricity required to keep the chain running.
The merge will see the Ethereum Proof-of-Work (POW) chain migrated to a Proof-of-Stake (POS) consensus algorithm. In proof of stake, a validator is randomly chosen, based in part on how many coins they have locked up in the blockchain network, also known as staking. The coins act as collateral and when a participant, or node, is chosen to validate a transaction, they receive a reward. This poses less threat to the environment than the POW.
Why is the Merge a Big Deal?
Ethereum is the world’s second-largest cryptocurrency according to its market capitalisation sitting at $180 billion as of the time of writing. It also hosts several usable Decentralized Applications (DApps) and establishes the authenticity of millions of non-fungible tokens (NFTs).
As a result, the world is keen to see what the outcome of the merge would result into as it will not just affect the Ethereum Blockchain, but a huge number of decentralised products relying on it.
And given Ethereum’s size and influence, the result of the merge is likely to have a ripple effect on the broader crypto industry.
Why Some People are Against the Merge.
While the majority of Ethereum users support the merge, a vocal minority criticises it as a grave error. Some ideological critics claim that proof of stake will make Ethereum more centralised and less secure. While some of this criticism is motivated by personal interests, such as miners worried about lost income.
4 Misconceptions About the Merge?
Will the Merge Affect Ethereum Transaction Fee?
No.
The merge will migrate Ethereum to a proof of stake algorithm, but it will not expand network capacity. Therefore, it will not impact the price of gas fees.
2. Will the Merge Improve Transaction Throughput?
No.
Though timing for new block creation and settlement (or finality) will change slightly post-merge, it won’t be substantial enough for Ethereum users to notice, the Ethereum Foundation says.
3. Will Investors be Able to Remove Their Staked Ether After the Merge?
No.
Investors would not be able to withdraw their staked Ether immediately after the merge occurs, they will have to wait until the Shanghai upgrade, which is “the next major upgrade following the merge,” the Ethereum Foundation says.
4. How Many Ether do I Need to be a Node Provider?
It’s free.
Ethereum core developer Tim Beiko said, “running a node is free, but thirty-two Ether is only needed to run a validator”.
How could things go wrong?
Despite years of practice and testing, some unforeseen issues may arise.
In the end, the merge does not guarantee to go smoothly. Several problems could occur, some of which are so complex that they can be challenging to plan for, such as problems with clients or software that verifies transactions, application breakdowns and others. The process can be sabotaged by bad actors who may find areas where they can exploit the system.
However, Ethereum developers and engineers said they are well prepared for any potential issues.
Do I need to do anything with my Ether?
No. Be very wary of anyone telling you otherwise.
As the Ethereum Foundation says:
“Users or holders of ETH or any crypto asset built on Ethereum, do not need to do anything with their funds or wallet before the merge.
“Any funds held in your wallet before the merge will still be accessible after the merge. No action is required to upgrade on your part.
“As we approach the merge of Ethereum, you should be on high alert for scams trying to take advantage of users during this transition.”
When Exactly is the Merge Taking Place?
Ethereum’s Proof-of-Work (PoW) chain is expected to migrate to the Proof-of-Stake (PoS) chain upon hitting the Terminal Total Difficulty (TTD) value of 58750000000000000000000.
2 Possibilities to Consider Before You Buy.
While The Merge is a strong step in the right direction for Ethereum, there are still risks involved.
Possibility of a Bug Being Detected
Developers have already found a bug related to the upcoming upgrade, and although they were able to quickly resolve the issue, there’s always a possibility for more hiccups as we get closer to the release date.
Possibility of Delaying the Upgrade
Ethereum has a long history of delaying updates. The Merge was originally scheduled for June before getting pushed to August and is now delayed until September. While it is better to hold off on an update than to rush and risk serious issues, all of these delays could cause investors to lose confidence in Ethereum — not to mention give competing cryptocurrencies more time to catch up.
Ethereum isn’t perfect, but this update should make it a stronger investment. If you’re willing to take on more risk for the chance of potentially earning substantial rewards, now may be the right time to invest. stream with the public, it will be tough for Ethereum to thrive over the long run. And at this point, it’s too early to say exactly how the crypto market will fare in the future.