The Ethereum merge explained: what’s all the fuss about?

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Now, Ethereum 2.0 runs using proof of stake”. In the­o­ry, this means that trans­ac­tions can become much quick­er and cheap­er to process. While this won’t hap­pen imme­di­ate­ly, the idea is that if it becomes cheap and easy to use (like instant ramen), then more and more peo­ple might well get involved. If that hap­pens, then the sup­ply of Ethereum, which has a lim­it­ed capac­i­ty, will start to be reached, which will make prices climb. It’s a bit like how land­lords are hik­ing up rent at the moment: places to live are in short sup­ply, so land­lords are charg­ing more because, sim­ply, they can. 

A more whol­ly good thing is that this upgrade should also ensure that secu­ri­ty across the blockchain is even bet­ter. This time, it’s not much to do with crazy cryp­to tech­nol­o­gy, but sim­ply the fact that proof of stake requires peo­ple who want to mine/​process trans­ac­tions to stake their coins as a sort of deposit (the ben­e­fit of stak­ing is you earn inter­est). The start­ing price is look­ing like it’ll be over £50,000 – hefty, yes, but this will apply to every­one who wants to access those ele­ments of the blockchain, includ­ing hack­ers. Hope­ful­ly, this will act as a deter­rent, mean­ing there might be less hack­ing attempts. You could still get scammed on Dis­cords and red­dit, and with basi­cal­ly any meme­coin you decide to buy, but it’s still a very decent plus. 

The upgrade also has huge envi­ron­men­tal ben­e­fits. Proof of work is basi­cal­ly the fos­sil fuel of cryp­to tech­nol­o­gy, using mass­es of ener­gy by mak­ing all the min­ers’ com­put­ers solve ridicu­lous­ly com­pli­cat­ed maths equa­tions, with the first to do so being able to mine the cryp­to. And Bit­coin still uses it. On the oth­er hand, Ethereum’s new proof of stake process could, as report­ed by the World Eco­nom­ic Forum, cut the network’s ener­gy usage by as much as 99.5%.”

So they’ve cracked it, have they? Does this make all the oth­er alt­coins, Ethereum com­peti­tors like Car­dano and Solana, and Lay­er 2’s (if you don’t know what this trendy new set of coins is, read this) redun­dant? Well, it could make some of them less use­ful, but many coins serve dif­fer­ent and spe­cif­ic pur­pos­es, so they’ll prob­a­bly be OK. Lay­er 2 cryp­to might even ben­e­fit, because if Ethereum wants to scale up while get­ting cheap­er and faster, it’ll prob­a­bly have to out­source some of the work­load to oth­er places. This is a major func­tion and pur­pose of Lay­er 2 blockchains like Poly­gon (MATIC), METIS and Loopring.

And this is just the begin­ning of the merge. Oth­er upgrades that might allow things like Web3 to flour­ish (should the mass­es actu­al­ly get on board with it in future) will start to trick­le in, too. 

So yeah, the merge is a big boi upgrade. Now you can tell all your mates and look real smart about it. 

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