The blockchain underpinning the world’s second-largest cryptocurrency is getting a major upgrade soon.
“It’ll be like replacing the engine of an airplane while its flying
The upcoming event dubbed the ‘merge’, will transform the backbone of how people transact with ether — a transformation that could make for a greener and more secure future in this part of the crypto world. But as some have described it, it’ll be like replacing the engine of an airplane while it’s flying.
The merge ‘replaces these energy-hungry machines’
The current competition incentivizes miners to run their computers at 100% for long periods of time, eating up massive amounts of energy — about the same carbon footprint made by the country of Finland, according to the blockchain firm Consensys.
That’s why critics are concerned about cryptocurrency’s environmental impact.
The merge will transform Ethereum from this current model, known as proof-of-work, to one called proof-of-stake, spelling the end of ether crypto mining. Instead, crypto owners who hold a certain amount of ether can deposit, or stake, it and become a so-called validator.
The more you stake, the greater chance you have of being chosen as a validator to arrange people’s transactions on the Ethereum blockchain into blocks — and reap the reward, which will be payable in ether.
Since these validators use their own crypto for staking, they’re incentivized to better perform their jobs. If they don’t, their staked ether starts to dip. That’s why proof-of-stake proponents hold the model up as a boon for greater security — validators are motivated to keep the network more secure.
There will also be fewer ether coins issued, creating more scarcity for the virtual currency.
Once the merge is complete, Ethereum’s blockchain will be completely proof-of-stake, a chain dubbed the Beacon Chain.
With more security and a lesser chance of adverse climate impact, experts predict that more institutional investors will be interested in the space. Billionaire investor Mark Cuban himself told Fortune recently that he’s “very bullish” on the merge.