Ethereum is one of the most popular crypto platforms and is the base platform for many other crypto tokens. Ethereum offers simplicity, functionality, and flexibility to deploy crypto projects, so many developers design their projects on this platform. As Ethereum users continue to increase in number, there is a notable increase in energy consumption in the proof-of-work methodology. So, Ethereum experts have designed a new way of confirming transactions that participate hugely in reducing energy use.
What is Ethereum Merge?
The current consensus mechanism is involved in proof-of-work that leads to significant energy use and energy waste. It will be against the sustainable development idea if the number of users and transactions continues to surge in the future. Along with increasing the number of transactions, we need more computing power to confirm them, which results in more energy use for mining.
Ethereum Merge focuses on the proof-of-stake methodology along with other improvements that aim at enhancing the scalability, security, and sustainability of the network. It went live in September 2022 to offer users great security and speed when performing Ethereum transactions. According to statistics, Ethereum Merge can significantly reduce the environmental impact of conventional methods related to the confirmation of transactions.
How Could It Affect?
Ethereum Merge offers a new approach to verifying within the platform, and it does affect the current verification system. The current process needs a lot of computing power, so we must consume an enormous amount of energy. Miners have to provide powerful systems to stay competitive and take advantage of the mining process.
But now, there is a new normal in the network that doesn’t really involve unfair competition for mining on the platform and making a profit. Proof-of-stake is an alternative that can save more than 99% in consuming energy. It is a substantial change and revolutionary shift to something interesting in the history of blockchain and decentralized networks.
When there is more energy saving within the network, there is an opportunity to innovate and enrich the platform. Now with Ethereum Merge, developers can continue expanding the possibilities of the Ethereum platform with peace of mind. But, be careful of scams in the network since scammers might exploit the situation with fraudulent offers.
How Does it Work?
Proof of Work (PoW) was the earliest method for verifying network transactions until Ethereum launched the proof of stake approach. In proof-of-work, miners participate in verifying blockchain transactions by calculating hashes. It is a decentralized process in which participants with more computing power have better chances to benefit from the incentives.
In proof-of-stake, participants are chosen randomly based on a methodology called staking. Users can stake their coins on the platform to take part in validating network transactions which eventually provides incentives for them. The staked coins act as collateral, and when participants validate a transaction, they receive rewards according to the network policies.
Note that proof-of-stake needs multiple validators to confirm that a transaction in the network is valid. This way, we only need staked coins to validate Ethereum transactions and maximize our decentralized platform. Notably, the metaverse is upcoming, and it will increase the number of transactions at an immense speed. Proof-of-stake ensures we can create a sustainable metaverse that is environmentally friendly and energy-efficient.
What Are the Benefits?
At first sight, proof-of-stake makes it easier for Ethereum users to take part in securing the network that gives them incentives. They only need some coins and a crypto wallet or trading platform. An amount of ETH coins will be deposited in a smart contract, and you can then receive incentives after a defined period of staking time.
Unlike proof-of-work, a validator node can be executed on a normal laptop when using the proof-of-stake methodology. Staking offers better financial opportunities for individuals, and it can be faster compared to proof-of-work. The people who want to take advantage of mining don’t need to buy powerful hardware tools in proof-of-stake. So, this can be cost-efficient.
When it comes to proof-of-stake, transactions and blocks can be validated faster since there is no need to solve complex equations. Speed is a priority for the future as the metaverse idea takes root. Before the official launch of proof-of-stake, Ethereum could process 30 transactions per second; the number was increased to 100,000 transactions after Ethereum Merge.
What About Crypto Projects?
Many project owners on the crypto platform are wondering what happens to their crypto projects, NFTs, and tokens. Will it affect other blockchain networks? Experts say bitcoin will continue to use proof-of-work and the effects of Ethereum Merge on the bitcoin network are still unclear.
This could lead to an issue for Ethereum miners that want to continue with the proof-of-work methodology. But, in the case of crypto projects and NFTs, there may be a significant change for ETH NFTs that are based on the proof-of-work chain and NFTs based on proof-of-work will experience a notable decrease in sales. NFTs aren’t the only assets that will be affected after the official launch of proof-of-stake.
Ethereum gaming and entertainment products have to adapt to new rules as we see many companies and service providers announcing that they no longer support proof-of-work. It requires immediate steps both for users and project owners to reform the procedures and build future projects according to the Ethereum Merge idea. From developers’ and project owners’ perspectives, there is a fundamental change. Unlike before, we don’t need powerful machines with remarkable computing power to make the platform secure. Typical computers or even ARM-based devices can help us secure the network, which is beneficial for project developers to get things done with better efficiency and functionality.
Is It the Time to Say Goodbye to Miners?
In proof-of-work, crypto transactions are verified by miners that the process happens in farms using powerful hardware tools. Mining farms should have high computing power to solve complex equations and participate in securing the network.
Proof-of-stake is completely different from proof-of-work as it is based on the wealth of validators who tend to participate in the security of the Ethereum network. Miners are replaced by validators who should send a specific amount of ETH to an address on the Ethereum platform. This amount of ETH cannot be used for buying or selling until the staking period is finished.
Staking can be a lucrative process for individuals in the network as they can invest only by depositing a small number of coins. The amount of staked ETH one sends to the dedicated address defines the number of incentives over time. This way, miners can turn their wealth into lucrative outcomes and save more on energy and hardware costs.
Final Thoughts
Ethereum Merge was launched recently, and it gives never-ending benefits to our decentralized platform. Merge integrates proof-of-stake into the network, which offers more speed and security at the moment. With the PoS consensus mechanism, validators take the responsibility that miners previously occupied. We have limited energy resources to dedicate to the blockchain network in order to verify transactions and blocks. So, proof-of-stake aims to solve the issue to expand the opportunities in the future that may be limited by other factors such as energy consumption and transaction speed.
Founder Dinis Guarda
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