What changes did the Merge bring for Ethereum?


Ethereum.

Ethereum Merge has been in the public eye since the big release, but what’s it all about? Is it only a shift from PoW to PoS or something more? And, if yes, how does it affect investors and miners? Well, we’ve gathered all the answers into this article, so be sure you read on.

Ethereum started another chapter of Ethereum 2.0 on September 15, when it officially changed from a PoW (Proof-of-Work) consensus mechanism to a PoS (Proof-of-Stake) model. The big transition happened at block 15537393, and many investors define the process as the best-case scenario. The shift, however, didn’t occur overnight; it has been years in the making – and testing. When it’s about such a huge transformation, everything should be in place so that no major blockchain disruption occurs. Several Ethereum commentators, ecosystem participants, and developers have closely watched each step leading up to the upgrade, looking for positive results.

The question is, did they achieve their goal of transforming a power-hungry PoW system into a more energy-saving one? Apparently, yes, but there’s much more to discuss for a full picture of the situation. Let’s get into it to learn more about the famous Merge!

What’s so special about Ethereum 2.0?

The shift to PoS no longer allows for Ethereum mining, so if you’ve discovered your mining abilities, we’re deeply sorry. As previously stated, Merge’s primary goal is to create an environmentally-friendly system, so there’s no longer a need for high-tech, energy-intensive equipment to mine or generate Ether. The Ethereum platform will, instead, depend on the so-called “stakers” to do the job of miners, that is, secure the network by verifying transactions. Stakers are nothing but addresses that have staked huge amounts of ETH. And, as it’s only normal, the ones staking more Ether gain proportionally more significant rewards. At first sight, the Merge only makes the rich richer, but if you take a deeper look into the concept, you’ll find that things aren’t exactly like that. The Merge is also aimed at making Ethereum cheaper to use and faster.

The ecological premium

In a PoW system, miners are required to solve complex mathematical problems to validate transactions and thus earn cryptocurrencies. But this process involves a lot of resources, including high-tech hardware and software. The thing with this equipment is that it consumes huge amounts of energy, threatening the environment. So, by eliminating computationally intensive PoW mining from the network, the big transition is about to minimize Ethereum’s overall energy consumption by almost 100%. The ecological impact of PoW mining has long been an impediment to blockchain implementation in general, but the shift to PoS promises to turn the tide.

On the one hand, unable or hesitant investors or institutions can benefit from Ethereum staking rather than investing in a sometimes-uncertain PoW system. Of course, there’s no dramatic change, all the more so since we witness a bear market. But it’s good – and recommended – to stay hopeful: this might have significant favorable inferences for the next bull cycle.

On the other hand, the transformation from PoW to PoS may be a game changer for NFTs (non-fungible tokens). NFTs are undoubtedly the most considerable development in Ethereum and probably the most evident case of real product-market fit on Ethereum. So, there’s a need for something to energize this market, and the Merge might be that “something”. Due to the PoS consensus algorithm, minting and sharing NFTs is a bit cheaper. According to NFT Club research, it takes about 83 kg of CO2 to add any NFT to a blockchain. Nonetheless, users are to see a significant reduction in energy consumption, as the PoS consensus is meant to cut carbon dioxide emissions and energy consumption by nearly 100%.

The Merge’s influence on actual and potential investors

Many experts, including crypto educator and YouTuber Hashashi, have speculated long before the Merge that there would be a positive reaction, and, indeed, that’s exactly what happened. Although the great shift isn’t projected to lower transaction costs or speed the network up at once, investors already garner some of Merge’s benefits. According to digital asset strategist and crypto analyst Armando Aguilar, the system’s development led to price rises regarding related altcoins. Projects such as Arbitrum and Polygon especially will gain positive momentum, so if you’re willing to invest in one of those mentioned above or in Ether itself, you’re more than entitled. The truth is that the Ethereum platform has proved particularly valuable regarding the future of cryptocurrencies and NFTs alike, so the chance for it to ever fall is minimal. However, before taking the leap, be sure you check the Ethereum price today, as well as aspects like market capitalization, trading volume, and liquidity.

Ethereum will eventually become faster and lower in transactions, and this is expected to generate more users. And, as you’ve probably guessed, the more investors out there, the higher the value of Ether – Ethereum’s native currency currently used for the so-called “gas fees”. The supply of Ether might also decrease, so the coin’s value is likely to increase. Regardless of the scenario, there’s a positive impact on crypto investors.

What about the PoW miners post-Merge?

Miners on the Ethereum blockchain no longer exist, as the platform’s new way of generating Ether and validating transactions is through stakers. So, anyone wishing to mine Ether in the PoS system isn’t allowed. But this isn’t the end – these individuals can choose to stake instead of mining, as it’s just as fruitful as the latter. And eventually, if miners aren’t ready to give up their fancy mining software and hardware, they can move to PoW networks such as ETHW (PoW Ethereum), a forked form of the Ethereum platform developed by a Chinese miner after the great shift. More such versions are expected, as not all miners embrace the PoS model and aren’t willing to abandon mining.

The crypto community is delighted

Surprisingly or not, prominent figures in the crypto industry, counting CryptoPunks and Bored Ape Yacht Club (BAYC), congratulated the team behind the project for their involvement. Many people from the vast crypto community agreed that the Merge is a welcome and highly beneficial change, and some even chose to celebrate the event on social media.





Source link