These days, the cryptocurrency industry could use some encouraging news. Additionally, it received some on Wednesday. This improvement, which eventually became known as simply “the merge,” is already being hailed as a pivotal juncture in the annals of cryptography’s long and illustrious history.
The most popular cryptocurrency platform, Ethereum, appears to have successfully upgraded its software architecture by switching from a type of blockchain known as “proof of work” to a type of blockchain known as “proof of stake.” Ethereum has been running a “proof of work” blockchain ever since it was launched in 2015, but the upgrade occurred recently.
What is the Ethereum Merge?
The Merge is an update to the Ethereum blockchain, which enables crypto ecosystem breakthroughs such as non-fungible tokens (NFTs). Formerly, the Ethereum blockchain, much like the Bitcoin blockchain, functioned on a proof-of-work paradigm, in which network nodes competed to solve complex arithmetic problems.
The update shifted Ethereum to the proof-of-stake paradigm, which is a more environmentally friendly and energy-efficient technology. It involves selecting nodes based on an algorithm that favors nodes that possess more of a network’s money.
When did the Merge take place?
Dozens of Ethereum developers convened on a jubilant Zoom call that was hosted by the Ethereum Foundation early on Thursday morning. The meeting took place as the first proof-of-stake transactions were being validated.
Vitalik Buterin, the creator of Ethereum, addressed the gathering and said that “this is the first step in Ethereum’s huge journey towards becoming a mature system.” “The merging, in my opinion, represents the transition from the early stages of Ethereum to the Ethereum that we have always desired,”
And many supporters of cryptocurrencies have high hopes that it will turn things around for the cryptocurrency movement, which has been plagued over the last year by losses totaling billions of dollars, a spate of big frauds and hacks, and a fresh wave of regulatory scrutiny.
The positive effects on the crypto market
To begin, it was by no means a guarantee that the merger would be successful. Changing the so-called consensus mechanism of a blockchain, which refers to how it processes and validates new transactions, is a frighteningly complicated operation. (Some creators of cryptocurrencies have likened it to switching out a spaceship’s engine in the middle of its journey.)
Before the merge, no one had ever attempted such a move on a cryptocurrency platform that was even close to the scale of Ethereum, and it took engineers several years of testing and study (not to mention a significant number of setbacks) before they felt confident enough to try it. Hundreds of billions of dollars worth of bitcoin transactions, NFT collections, and Defi protocols may have been irreversibly disrupted if the merging hadn’t gone according to plan. Ethereum is an open-source platform.
The new Ethereum blockchain is far less harmful to the environment than the previous one, which is the second reason why supporters of cryptocurrencies are ecstatic about the integration. In the past, the security of Ethereum was provided by a distributed network of very powerful computers.
These machines battled one another to solve cryptographic riddles, resulting in a significant amount of wasted energy. Now, it will be protected by a method that is known as “staking.” Staking is a procedure in which investors agree to deposit their cryptocurrencies in a common pool in return for the opportunity to receive monetary benefits.
There are other advantages to the merging, such as the fact that it is anticipated to make Ethereum quicker and more efficient in the long term; nevertheless, the biggest and most immediate gain is the reduction in the environmental impact. Researchers in the cryptocurrency space predicts that the updated Ethereum blockchain will have an energy footprint that is 99.95 percent less than the previous version.