In the last few minutes before the clock struck midnight on the West Coast on Wednesday, the moment had finally come.
The prominent cryptocurrency network Ethereum has finished a long-awaited software update known as the Merge, transitioning to a foundation that is more ecologically friendly after years of delays, arguments, and frenzied testing.
Ethereum is a layer of software infrastructure that forms the backbone of hundreds of apps that are responsible for processing more than $50 billion in client payments. It is widely considered to be the most important platform in the cryptocurrency sector. It is anticipated that the update would lower Ethereum’s energy usage. Additionally, it will pave the way for potential future enhancements that will make the platform more user-friendly and cost less to operate.
On the occasion of the occasion, engineers and researchers who had been working on the Merge had gotten together to celebrate on a livestream that was being broadcast on YouTube. It was a fleeting moment of happiness in an otherwise gloomy year for the cryptocurrency business, which saw a terrible market crisis that drained roughly one trillion dollars from the industry and forced many big cryptocurrency firms to declare bankruptcy.
An Ethereum researcher named Danny Ryan, who has worked on the Merge, was celebrating with a bunch of his coworkers when he made the statement, “This is going as good as it could so far.”
Users of cryptocurrencies were keeping an eye out for any bugs that would make the shift more difficult. A vulnerability in the Merge may put the whole cryptocurrency sector at risk, which would devastate new businesses and throw the market into a spiral. As a preventative move, the cryptocurrency exchange Coinbase said in August that it will suspend some Ethereum deposits and withdrawals during the Merge.
During interviews conducted before to the Merge, Ethereum developers said that they had planned for challenges, although they played down the likelihood of a collapse affecting the whole system.
The Merge’s technical particulars are very complicated and difficult to understand. However, in the end, all that is required is a change in the verification procedures for bitcoin transactions.
An intermediary, such as a bank, is required for a transaction involving an exchange of funds in conventional finance. This intermediary ensures that the first party has the cash to pay the second party.
Cryptocurrency was developed with the goal of doing away with middlemen like these in the financial system. Therefore, early crypto engineers were forced to come up with an alternate approach in order to verify that users really had the assets that they claimed to possess. The name they gave to their solution was “proof of labour.” Powerful computers are used in this method to run software that competes to find solutions to difficult problems while simultaneously confirming financial transactions. Because the computers participate in the verification process and are rewarded with payments in bitcoin for their efforts, the process is often referred to as “mine.”
Proof-of-work is the underlying technology that Bitcoin, the first and most valuable cryptocurrency, relies on. And Ethereum performed the same thing up to the Merge. However, the procedure is harmful to the environment since it consumes a significant amount of energy to keep all of those computers operational.
During The Merge, Ethereum will transition to a verification technique known as “proof of stake,” which will use less energy. The new framework, in contrast to the proof of work, does not include a computational race that consumes a lot of energy. In its place, members “stake” a specific portion of their cryptocurrency savings in a pool, which then puts them into a lottery for the pool’s prize pool. Winners are chosen randomly each time a crypto transaction has to be approved, and the person who validates the trade gets rewarded for their efforts.
The implementation of proof of stake, according to some estimates, would result in a decrease in Ethereum’s overall energy usage of more than 99 percent. The creators of the project believe that the transition would make it simpler for them to design future upgrades that decrease what are known as “gas fees.” Gas fees are the charges involved with carrying out a transaction using Ether, the cryptocurrency that is linked with the Ethereum platform.
The transition from proof of work to proof of stake on Ethereum requires many years of in-depth research and discussion. Vitalik Buterin, then a teenager and a software engineer, established the platform in 2013. Buterin is now considered to be one of the most significant figures in the cryptocurrency sector. The cryptocurrency known as Ethereum is being managed by a decentralised network of programmers from all around the globe. They have been meeting on video conferences that have been aired on YouTube for a number of weeks in order to discuss the subtleties of the Merge.
The transition to proof of stake took so much time in part because it needed the building of a totally new blockchain. A blockchain is a public ledger that keeps track of all bitcoin transactions and makes them visible to the public. This brand-new necklace, known as the Beacon Chain, was shown to the public in December of 2020. This year continued with its regular schedule of examinations.
The “merge” is now complete, which indicates that the Beacon Chain has successfully integrated with the main Ethereum blockchain.