Ethereum founder and CEO Vitalik Buterin in a tweet congratulated all participants on the recent successful merging of the original Ethereum Mainnnet with a separate Proof-of-Stake Blockchain called Beacon Chain. Vitalik is not alone in the high spirit about the merge, Ripple CEO, Brad Garlinghouse also couldn’t hide his excitement. In a congratulatory tweet, he said the Ethereum merge is truly an incredible technological feat.
What is Ethereum Merge?
Recently, Ethereum embarked on an update that migrated the Ethereum blockchain code to a less energy-intensive system. The merge was officially kick-started by Bellatrix on September 6 at 11:34 UTC. Bellatrix is a network upgrade on the consensus layer. It is an update to the Ethereum virtual machine which is the part of the network that hosts the decentralized applications, Daaps.
How Does Merge Affect Ethereum?
This is a big moment for Ethereum, the upgrade has moved the cryptocurrency to the core of the second largest and made it less harmful to the environment. Ethereum network has become one of the first blockchains to convert from Proof-of-Work to Proof-of-Stake for more energy efficiency. It will provide improved security, better performance, and higher scalability to the network based on the Ethereum foundation. The upgrade will pave way for the implementation of the Ethereum 2:0 network.
The merge means:
- Complete transition from PoW to PoS
- Ethereum is capable of future upgrades including sharding
- The network is upgraded with zero time
- A reduction in Ethereum’s energy consumption by 99.95%, will increase Ethereum-based entities’ ESG ratings.
- Ethereum network is upgraded with zero network downtime
- Dapps can easily prepare.
However, analysts think the upgrade will not reduce the Ethereum gas fee, but further upgrades will create room for higher scalability and gas fee reduction.
According to Prasanna Lohar, CEO of Block Stack and cofounder of India Blockchain Forum, in theory, the Merge will make Ethereum more efficient and quicker, with shorter processing times during peak network usage by removing the energy-intensive processes known as mining. The Merge results in The Beacon Chain which don’t change anything about the Ethereum we use today. It is an essential precursor to upcoming scaling upgrades, such as sharding. It involves splitting Ethereum into smaller and more manageable segments.
What Does the Merge Mean to Investors?
Ethereum merge will enable the transition of blockchain from a proof-of-work (PoW) to the proof-of-stake (PoS) model. Both models are algorithms that enable users to add new cryptocurrency transactions and keep a record of them on a blockchain network. Investors believe this will drive the adoption of the network and its cryptocurrency ether, and distinguish it from Bitcoin which is energy-intensive.
In 2022, the token ether has been performing above bitcoin by a wide margin. Analysts think the merge could push Ethereum’s price to new heights and investors could see huge price movement.
A lot of excitement is going on in the crypto space among enthusiasts and investors, it is expected that the big event, the Ethereum merge will boost the price in the long run and bring a significant change in the cryptocurrency industry.