The cryptocurrency community is abuzz about what could prove to be a landmark event. A major upgrade dubbed “the Merge” of the Ethereum blockchain.
Crypto enthusiasts say the Merge will greatly reduce the environmental impact of cryptocurrency mining. It also enhances its utility as a way to conduct financial transactions. Amongst other uses.
But what exactly is the Merge, and how it could change the future of crypto?
What is the Merge?
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Ethereum, launched by Canadian computer programmer Vitalik Buterin in 2015, is a blockchain (or a digital ledger).
It’s one of the world’s most used blockchains, second only to the bitcoin network. Think of the Merge as the next generation, or 2.0 version, of Ethereum. After nearly two years thinking about and testing a new way of conducting transactions, Ethereum developers say it’s finally ready for prime time.
Put simply, the Merge aims to simplify the transaction steps on the Ethereum network.
The change is called “The Merge” because, currently, there are several ways to create a new data block. Developers plan to combine those existing methods into a single process. One they say is both more secure and eco-friendly.
When Is It Going To Happen And Why Now?
The Merge is to take place on the 15th of this month (September).
The Merge is happening now because Ethereum is mature enough to handle financial payments. In addition, the network is also deemed fit enough to store non-fungible tokens and trade crypto, said blockchain expert Merav Ozair.
Ethereum can carry out 15 transactions per second in its current form, said Ozair. Ozair founder of startup company Blockchain Intelligence.
However, if the Merge is successful, the blockchain could eventually handle up to 100,000 transactions per second. This is “way above and beyond what Visa and Mastercard can do,” she said.
How Would The Merge Reduce Carbon Emissions In Cryptocurrency?
In a blockchain network, transactions aren’t verified by a bank, credit card company or other third party.
Rather, it relies on a network of computers competing to solve complex problems in exchange for tokens. It takes thousands of computers to verify transactions on the Ethereum blockchain, a process known as “proof-of-work.”
All of those powerful server computers chugging away together require vast amounts of power.
The Ethereum blockchain uses about 112 terawatt-hours of electricity a year. That is roughly the same amount of energy used to power the Netherlands. That level of energy consumption releases about 53 metric tons of harmful carbon emissions into the environment annually. This is the same amount Singapore produces in a year.
The Merge replaces the proof-of-work system with an alternative approach called “proof-of-stake.”
In that system, cryptocurrency owners known as “validators” verify transactions and record them on a new block.
It is because proof-of-stake involves fewer people using their computers to verify transactions, fewer terawatt-hours are burned.
Using proof-of-stake, the Merge is projected to reduce ethereum blockchain’s energy consumption by 99.9%, developers said.
Will the Merge make it safer to use cryptocurrency?
Quite possibly. Since December 2020, Ethereum developers have been running essentially two different versions of the blockchain at the same time.
The Beacon version was used so they could test the proof-of-stake system, while the Mainnet version carried on with business as usual using proof of work. But having both versions running gave hackers twice as many entry points to potentially attack Ethereum.
After the Merge, the Mainnet version will disappear and financial transactions will only live on Beacon. Deleting one version of the chain, combined with having a small pool of validators, will reduce the odds of a hacker harming the blockchain, developers said.