By
Temitope Olatunji
April 18th, 2024
Despite more than a few concerns, the Ethereum Merge is expected to revolutionize the network with far-reaching positive ramifications.
The much-anticipated Ethereum Merge is less than 24 hours away and the crypto community remains agog over what this means for the industry. Currently, the general consensus is that the Ethereum Merge will drastically cut down on the environmental effect of crypto mining. In addition, crypto enthusiasts and observers also opine that the Ethereum network upgrade will broadly open up its utility use cases. This implies that users will become privy to more varied possibilities across finance transactions, entertainment, and other sectors.
Breakdown of the Ethereum Merge
The Merge essentially switches Ethereum’s mechanism from proof-of-work (PoW) to proof-of-stake (PoS). This change, which occurs on September 15th, represents an overhaul in how users of the underlying blockchain interact with it. By adopting the PoS module, owners of the native Ether (ETH) digital currency can now stake some of it to power the blockchain. This is the opposite of the outgoing PoW orientation, which relies on traditional mining or powerful computers solving complex math. By switching to PoS, Ethereum reportedly offers a ‘greener’, less energy-intensive, and cost-effective way of undertaking transactions on its mainnet. Simply put, the network is reducing the number of people and computers required to onboard another data block.
The upgrade derives its ‘Merge’ designation from combining existing ways of creating a new data block into a single eco-friendly process. After almost two years of testing, from conceptualization to testnet dress rehearsals, developers are now reasonably confident. Although the Merge begins in less than a day, developers have a September 19th deadline to apply finishing touches.
Industry Implications
Several crypto observers are weighing in on the Merge and its potentially far-reaching implications across the industry. For instance, Blockchain Intelligence founder Merav Ozair believes the upgrade is happening now because Ethereum is capable of handling consequent responsibilities. These include handling financial payments, storing non-fungible tokens (NFTs), trading crypto, and hosting smart contracts. Additionally, developers also state that the Merge executes all aforementioned tasks in a more streamlined and swift manner. Ozair also buttresses this claim saying transactions could reach 100,000 transactions per second from its current rate of 15 transactions. Furthermore, Ozair states that this potential processing capability far surpasses “what Visa and Mastercard can do.”
Potential Downsides
For all its touted benefits, the Ethereum mainnet shift to PoS is not without some concerns. For instance, there is a minute chance that the protocol may experience potential mishaps or malfunctions. In addition, it is still unclear just how impactful the upgrade will be on Ether. Furthermore, some observers also believe that the emphasis on using ETH as a validator for PoS may create endemic problems for some users. As BSV Blockchain Association’s global public policy director Bryan Daugherty explains, the PoS switch will likely create haves and have-nots among Ethereum users. This separation may also expand to include validators. “You’re forcing people to lock up your coins, that seems major red-flaggy to me,” he adds.