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There is a buzz in the world of crypto about “the merge” and the impact that it could have on the Ethereum blockchain. Overall, the buzz is positive. Ethereum is trading up while its transaction fees are going down. Still, there are a few things that investors and others who rely on the Ethereum blockchain should be aware of as the date for the merge draws near.
The shift to proof-of-stake
The merge, which is currently set to take place on September 19, will bring together the Ethereum Mainnet system with its Beacon Chain system. The result will be the end of proof-of-work on the Ethereum network. Once the merge is complete, Ethereum transactions will be verified by a prior-of-stake consensus.
Proof-of-work, which is a common system for validating crypto transactions or mining new coins, has been targeted by environmentalists due to its energy requirements. The outcry has led the Biden administration to issue an executive order calling for a study of how to make crypto more environmentally responsible.
The creation of a more eco-friendly network will definitely be the biggest benefit of the merge. Upgrading scalability is a close second. Congestions on its network and high levels of energy consumption have been two of the top concerns that Ethereum has faced to this point. Shifting to proof-of-stake will result in positive change in both of those areas.
Ethereum says that by transitioning to proof-of-stake it will reduce its energy consumption by approximately 99.95 percent. The company calls the move a “truly exciting step in realizing the Ethereum vision — more scalability, security, and sustainability.”
The ultimate impact of the shift
Miners involved with the Ethereum network are those who stand to be most affected by the shift. With proof-of-work no longer needed, mining pools are transitioning to staking pools. The concern is that miners will shut down their operations in anticipation of the merge, rather than after. Some believe this could result in security concerns for the blockchain. Ethereum simply says that validator exits “are rate limited for security reasons.”
Ethereum has sought to address concerns about the shift through a “Misconceptions about The Merge” page on its website. One item it addresses is a concern about downtime on the blockchain, which Ethereum says will not happen as a result of the merge. It also says it is false that the transactions will be faster after the merge.
A rise in Ethereum-related scams is another possibility that has some concerned as the merge draws closer. Ethereum users have been warned by the company to be “on high alert” for scammers looking to leverage the merge for their own gain. “There is no ‘ETH2’ token, and there is nothing more you need to do for your funds to remain safe,” it says on its website, adding that users should not send ETH anywhere for the purpose of upgrading to ETH2.
The merge represents the next step in an upgrade process that Ethereum believes is necessary to make its blockchain better for existing users and more attractive to new users. It acknowledges the potential for problems, calling it the most significant upgrade in its history. Still, it remains confident that “extensive testing and bug bounties” will result in a safe transition.
Author Bio
— Jacky Goh is the CEO and Co-founder of Rewards Bunny, an online platform that rewards shoppers with cashback in crypto or US dollars. As a serial entrepreneur, Jacky loves connecting people with a purpose. Having been in the crypto space for a long time, he understands what makes a project attractive and loves the idea of people earning rewards that multiply like bunnies.
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