What is Merge? When did this start?
Merge is an upgrade to the way transactions are validated on the Ethereum blockchain. It moves the network from a proof-of-stake (PoS) system to a proof-of-work (PoW) system, which is designed to be more environmentally sustainable and faster. According to the Ethereum Foundation, the merge will reduce the total energy consumption of the Ethereum network by 99.95%. Blockchain has a short history so far, but in that history, merges have become one of the most widely publicized and anticipated events. It has been in the works for six years and September 15th marked the end of that build-up.
What do PoS and PoW mean?
PoS and PoW are consensus mechanisms through which transactions are validated on the blockchain. PoW consumes more energy as it allows all miners on the network to try and validate transactions. As a result, more computers attack transactions and therefore consume more energy. PoS removes miners from the equation, replacing them with entities called ‘verifiers’. These validators put stake (at least 32ETH) in order to gain the authority to validate the transaction. Only the top stakeholders are rewarded for their work. Their bets are kept in a central wallet, and they are penalized for mistakes or fraud.
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Are there any drawbacks to merge?
At the time of writing, 32ETH was worth 40,51,276.41. The main concern is that the merge will hand over control of the network to wealthy entities, as they will be able to stake the most ETH. For example, the three largest crypto exchanges – Coinbase, Kraken and Binance – currently hold 30% of the total stake.
Why would the merger raise prices?
The merge will be followed by four more phases – called Surge, The Verge, Purge and Splurge – eventually expected to increase the total transactions supported by Ethereum to 100,000 per second, in a league similar to that of Visa and Mastercard. Scalability is preventing many institutions from adopting blockchain. Ethereum is already one of the most preferred platforms for building blockchain-based products, and being scalable will make it more attractive to developers, increasing the value of Ether, the network’s native token.
Is Ethereum the only PoS network?
No. Other PoS networks have existed for a long time, including Cardano, Solana, and Binance Smart Chain. However, the ‘smart contract’ technology that allowed the creation of Dapps in the first place was first introduced by Ethereum, making it the proverbial early bird. It has been the most favorite among developers who build decentralized applications or dapps. The Ethereum portfolio includes some of the most famous dapps in the world today.
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