Sunday, February 25, 2024
HomeEconomyNarrator - Learn about Ethereum's major "merge" upgrade

Narrator – Learn about Ethereum's major “merge” upgrade

by Hannah Lang

(Reuters) – Ethereum , the blockchain that underpins the world’s second largest cryptocurrency, Ethereum , coming soon with a major software upgrade that promises to slash the energy needed to create new coins and conduct transactions.

Here’s what you need to know about “merging,” as the shift is well known.

So what is a merge?

The Ethereum blockchain will be merged with a separate blockchain, fundamentally changing how it handles transactions and how new ether is created.

The new system, dubbed “proof of stake,” will reduce the energy consumption of the ethereum blockchain by 99.9%, developers say. Most blockchains, including Bitcoin, consume a lot of energy, prompting criticism from some investors and environmentalists.

The Ethereum Foundation, a prominent nonprofit that claims to support ethereum, said the upgrade will pave the way for ethereum to further update the blockchain in a way that will facilitate cheaper transactions. High costs and slow transaction times are the two main problems users currently have with the Ethereum network.

When does it happen?

soon. The merger is scheduled to be completed between September 10 and 50, but the exact timing is uncertain. Independent estimates point to September 15 as a likely date.

Major cryptocurrency exchanges including Coinbase (NASDAQ: COIN) Global and Binance say they will ETH deposits and withdrawals are suspended. As part of the upgrade, users don’t need to do anything with their funds or digital wallets, they said.

How big is this deal?

Ethereum proponents say the merger is a milestone moment for the $1 trillion crypto industry.

Proponents argue that a merger would make ethereum — the world’s top cryptocurrency — more favorable in terms of price and availability than its main rival, bitcoin.

This may lead to wider adoption of Ethereum applications. Investors are betting that the change in the price of ether will be significant, with ether up more than 50% since the end of June, while bitcoin is down slightly.

Proof of stake? Sound Technology

It is. But it’s also important.

Transactions on the blockchain – the software that supports most cryptocurrencies – can be verified in different ways. In the “Proof of Work” system currently used by Ethereum, new transactions are checked by cryptominers.

Miners use powerful computers to solve complex mathematical puzzles and update the blockchain to earn new crypto tokens. While this makes records on the blockchain secure, it is highly energy-intensive.

In a “Proof of Stake” system, ether owners will lock up a certain amount of tokens to check new records on the blockchain, earning on top of their “staking” cryptocurrency new token.

Sounds easy, right?

Maybe. While ethereum developers say the proof-of-stake model has protections against hackers, others say criminals could attack the blockchain under the new system.

If a single entity accumulates most of the ether used to validate new transactions, they can change the blockchain and steal the tokens. Crypto experts also said that technical glitches could disrupt Merge, and scammers could use the chaos to steal coins.

It may also become easier for developers to build programs on Ethereum, potentially increasing adoption. Still, these updates could be months or even years away.

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

LAST NEWS

Featured NEWS