Ethereum, the second largest blockchain network after bitcoin, has completed the transition from proof-of-work to proof-of-stake. One of the biggest developments in the crypto world that was dubbed as a “merger” took place on September 15th at around 1:30am IST. The whole world was eagerly waiting for this merger.
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Announcing the great achievement of the Ethereum merger, Vitalik Buterin, the founder of Ethereum, posted a tweet on his official Twitter handle and wrote, “And we have finalized! Happy merger everyone. This is a big moment for the Ethereum ecosystem. Everyone who helped bring about the merger should feel very proud today.”
And we made the final!
Happy merger everyone. This is a big moment for the Ethereum ecosystem. Everyone who helped lead the merger should feel very proud today. — vitalik.eth (@vitalikbuterin) September 15, 2022
Here is everything you need to know about merging:-
What is Proof-of-Work and Proof-of-Stake?
Let us understand each of them one by one, sorting out the jargon related to the crypto world. Both of these are algorithms that are used to allow users to add new crypto currency transactions or blocks for record keeping on the blockchain network.
Under the proof-of-work method, validators (who validate transactions) are required to solve complex mathematical puzzles. A huge amount of energy is required to power a computer and this has to be done in every transaction. Therefore, the method was energy-guzzling.
On the other hand, under proof-of-stake, validators are required to hold a substantial stake in the blockchain in order to validate a transaction. This means that Ethereum users will have to invest a substantial amount in the cryptocurrency to validate the transaction.
Why is this happening?
The old way – proof-of-work, takes enormous energy to power huge computers, which users use to authenticate transactions. Whereas the new method – proof-of-stake, according to some reports, takes 99% less energy because it does not require solving complex mathematical problems to prove it. After all, Ethereum is building itself an eco-friendly and planet-saving blockchain system.
Ethereum founder Vitalik claimed that the merger would reduce worldwide electricity consumption by 0.2%. Blockchain has long been criticized for polluting the environment and wasting huge amounts of energy.
How will this affect Ethereum users and potential investors?
Sooner or later investors and users will see decent profits down the line. More users could eventually add up to quicker transactions and lower costs, which could have an impact on the price of Ether, the platform’s native cryptocurrency that investors use to conduct transactions.
In addition, users require a certain amount of Ethereum to authenticate transactions, which means that hackers will not easily come across the blockchain network. They have to invest first to hack the network. This will make the network secure and strong. Ultimately, this forces Bitcoin to take such measures.