🔴 Ethereum Merge — Everything you need to know
The biggest upgrade the crypto industry has ever seen is called Ethereum merge. This merge is changing the consensus mechanism from proof of work( Similar to Bitcoin) to proof of stake ( similar to Solana, Terra, and Cardano). which is expected to drastically reduce its environmental impact while improving network efficiency.
There are a lot of things to unpack.
Why Ethereum is doing this? Why does It take so long? It took 7 years to get to this point. Why it is called merge? What about this merge so exciting? How this merge is going to change everything? What it will do with the native currency Ethereum? ( Hint: A lot of things are going to change). And does Ethereum has the potential to flip Bitcoin and take the first spot?
Let’s unpack this together.
What is merge?
The Merge represents the Ethereum network’s shift to proof-of-stake (PoS), its new system (also called a “consensus mechanism”) for authenticating crypto transactions. The new system will replace proof-of-work (PoW), the more power-hungry mechanism pioneered by Bitcoin.
It’s called merge because it is merged to chains that run in parallel. Ethereum blockchain is being merged with a special purpose blockchain called a beacon chain. Beacon chain launched in December 2020. The purpose of the beacon chain is to do one thing only be a proof-of-stake blockchain. On the beacon chain there are no defi apps, no native token there is nothing on this chain. Because the Beacon chain is empty running on proof-of-stake will merge with Ethereum's main net chain running on proof-of-work.
When these chains will merge then the Ethereum consensus mechanism will be replaced by Brand new proof of stake mechanism. Back in 2015 Ethereum launched with a proof of work mechanism. It is planned after launching the Ethereum consensus mechanism to replace proof of work with a proof of stake mechanism. But it is too difficult to do it. So one year turned into seven. Most of Ethereum's test net already shifted from proof of work to proof of stake. Like ( Ropsten on June 8), ( Goerli on Aug 10). It gives confidence to developers of Ethereum that it's time to do this with the main net. So, the Ethereum date has been set between September 15 to 16.
Why merge is so hyped🤷‍♀️?
So, the answer is no blockchain has ever done such a significant change in crypto's space history.
Reducing Ethereum issuance
After the merge happen issuance of ether every single year was reduced by 90 %. from 4.3% to 0.43% this is because of fundamental improvement in efficiency that proof of stake consensus mechanism brings proof of stake is designed by the highest level of blockchain security for the lowest amount of cost and these savings are passed on to the ether holders.
Proof of work is expensive it requires a significant amount of electricity consumption in order to provide security. It replaces electricity consumption with the opportunity cost of capital which is a fancy way to say stakes ethers.
Energy Consumption Changed
The change to Ethereum’s Energy consumption with the merge. Ethereum merge reduces electricity consumption by Ethereum by 99.99%. Proof of Stake secures a Blockchain with capital instead of Energy. Instead of consuming energy you just stake your ether the remaining energy that’s needed to maintain Ethereum is comparable to basic computer usage the stuff you are doing right now like reading this article sending tweets downloading a movie to your hard drive stuff like this. with proof of stake enabled the energy cost of Ethereum is just running a node and it’s estimated that with proof of stake Ethereum. Ethereum is going to consume 1300 times less than what the entire US gaming industry consumes. Ethereum will quite literally be the most environmentally friendly financial system the world has ever seen.
The banking and financial industry still require people to physically move around in combustion engine cars they have to have a light on physical buildings they have to take up space with office buildings and otherwise consume energy that would no longer be needed in crypto enabled world. Crypto grow a terrible brand in 2021as being this wasteful industry that’s going to consume all the world’s electricity. while these beliefs weren’t entirely accurate it is what it is. As the Ethereum blockchain merged with the beacon chain. It will consume just as less as electricity as you viewing this article.
Ethereum Scalability
Will Ethereum merge lower transaction fee cost 🤷‍♀️ ?
Sadly No,
It seems that Ethereum is gearing up to be future-proof and take on a massive transaction load that will likely follow mass adoption. The more solutions there are, the more likely overall network congestion can be reduced. In addition, this can also prevent single points of failure if one scaling solution turns out to be insufficient. Having several scaling solutions not only prepares the network for increased transaction speed and throughput but also helps users avoid high transaction fees.
What is Ethereum merge all about?
What is the Merge? The Merge represents the Ethereum network’s shift to proof-of-stake, its new system (also called a “consensus mechanism”) for authenticating crypto transactions. The new system will replace proof-of-work (PoW), the more power-hungry mechanism pioneered by Bitcoin
Disclaimer
If you don’t know about the consensus mechanism
You can read this article 👉 https://medium.com/@InzamamAhmad/what-is-consensus-in-blockchain-bdf3c8598699
Here I explain about consensus mechanism in an easy way
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