Change is coming in a few days on the Ethereum blockchain. A major operation that those responsible for the ecosystem have called “The Merge”. But by the way, why do we speak of “merger” in this way? And above all, what does this mean for all blockchain players?
What is “The Merge” on the Ethereum blockchain?
The Merge is the culmination of a process started on December 1, 2020 with the launch of the “Beacon Chain” – as part of the Ethereum 2.0 (Eth2) update project. Basically, the idea was mainly to increase the maximum number of transactions from 15 to potentially several tens of thousands per second.
But from the start, the Beacon Chain also has an interesting particularity: the transactions are no longer validated by the Proof-of-work system, which is based on the resolution of cryptographic challenges, but by the Proof-of-stake system ( proof of stake, or ownership) which is based on a reduced number of validators, who hold a certain amount of Ether.
The Merge is the merger between the main Ethereum blockchain, the “mainnet” that classic users have known so far, based on Proof-of-work and the “Beacon Chain” which is based on Proof-of-stake. After The Merger, it will no longer be possible to “mine” Ehtereum via the Proof-of-work system on the blockchain.
The new consensus system will be the only valid one to secure the entire ecosystem.
At what date and time does the merger (The Merge) take place?
The Merge is a huge update that takes place in two stages whose execution date depends on reaching a certain hashing difficulty called Terminal Total Difficulty (TTD). The first step of this big update, code name Bellatrixtook place on September 5, 2022.
The final stage, code name Parisis scheduled upon reaching a TTD of 58,750,000,000,000,000,000,000 – which should take place, according to the Ethereum blog, between September 10 and 20, 2022. Several sites nevertheless give much higher estimates. exact date of the final stage.
The brothel.wtf site (it’s not made up… but we emphasize that it is quoted by the official Ethereum blog) thinks that the update will take place on Thursday, September 15 between 3:56 a.m. and 8:16 a.m. morning. The page 797.io/themege estimates the time of the final update of The Merge at 5:30 am the same day.
Why moving from “Proof-of-work” to “Proof-of-stake” changes the situation?
The move from Proof-of-work to Proof-of-stake is unlikely to be a game-changer for most Ethereum blockchain users, whether they pay with Ether or any other crypto on the Ethereum blockchain. blockchain or they use smart contracts. The change is more structural – it must allow the Ethereum blockchain and the entire ecosystem to work better, and above all to take an eco-responsible turn.
Basing the validation of transactions on evidence drawn from cryptographic calculations (Proof-of-work) is an effective and relatively simple way to secure blockchains. But this method encourages many players to become minors, i.e. to build “rigs” made up of many GPUs to try, by performing billions of operations, to obtain the right to offer a block on the blockchain. Ethereum (resulting in a reward in Ethers in the context of Ether mining for example).
The problem is that by encouraging this activity, energy consumption skyrockets. The Ethereum blockchain thus currently consumes, according to Ethereum.org, some 112 terawatt-hours per year. This is roughly equivalent to the electricity consumption of the Netherlands (17.53 million inhabitants). The transition to Proof-of-stake should reduce this energy impact by 95.99% according to the Ethereum project managers.
Who are the new “miners” after the merger and how to become an “Ethereum 2.0 validator”?
Before continuing, it is necessary to underline a very important point. If it will no longer be possible after The Merge to create a node on the Ethereum blockchain to validate transactions according to the Proof-of-work system, it will remain possible to freely create other types of nodes. For example, users are encouraged to download a copy of the blockchain to their computer, which also helps secure the entire ecosystem (but won’t earn you any money).
Otherwise, those who wish to continue generating money by validating transactions on the Ethereum blockchain will need to become “validators”. But there are conditions: you must first own at least 32 ETH (at the time of writing, this represents approximately €54,110), and transfer them to the Ethereum blockchain deposit contract – an irreversible operation .
Then, you must have a computer with these minimum requirements:
- Linux, macOS or Windows
- At least 500 GB of free space (1 TB recommended due to the scalable size of the blockchain)
- A recent processor and enough RAM (the data sheet depends on your staking and how many transactions you are likely to process)
- A very high speed internet connection (24/7)
Software for validators must be installed on this machine. The validation itself remains automated, although it now requires far fewer resources and energy.
Do I need to do anything if I hold Ether or another crypto on the Ethereum blockchain?
Ethereum officials are formal: “there is no need to do anything to protect your funds during The Merger”. No action is required. For regular users, The Merge does not change anything in blockchain wallets, payments and other transactions.
In fact, as we told you above, we are in a transition phase on validations, but the very essence of what your cryptoassets are on the blockchain does not change, and there is therefore no need to somehow “update” what you have on deposit in your wallet.
You can use everything as you are used to, without performing any particular action.
Do we risk more scams during the period around the merger?
Yes, and we will therefore have to be very careful. Because we emphasize it again, if you hold Ether or any other crypto on the blockchain there is absolutely no action to take to “protect” or “convert” your cryptoassets. They remain just as valid as before.
But malicious actors who claim otherwise will be plentiful around the transition. It is therefore essential not to carry out any transaction or action in connection with the transition and not to give in to any alarmist message, whether received by email, SMS, WhatsApp, or taken from a sponsored result after a search on Google. .
Also beware of crypto-spoofed customers: hackers are currently buying sponsored results to push the visibility of malicious sites that impersonate legitimate players like metamask.
What does The Merge change for other cryptos?
For now the impact of The Merge on other crypto is rather a hope. Indeed, competing blockchains such as Bitcoin remain tied to the more energy-intensive Proof-of-work system. But this could eventually cost them their place in the portfolio of many investors.
Several large companies like Tesla, or many insurance and finance players are indeed giving the signal that they are ready to adopt cryptocurrencies, whether for payments, smart contracts or purely for investment purposes.
But as we stand on the cusp of climate catastrophe, the consumption of blockchains is shocking, and overall preventing blockchains from being adopted by as many actors as they should be.
Being the first major blockchain on the podium of the most important cryptos to move to Proof-of-stake, Ethereum compares favorably to competing blockchains. Especially since Ethereum has already demonstrated its usefulness beyond speculation through multiple advanced features such as smart contracts.
As a result, many investors believe that the capitalization of Ether, the main blockchain crypto, will soon surpass that of Bitcoin. Currently the capitalization of Ether is around 205 billion euros against around 399 billion euros for Bitcoin.
If this happens, and Ethereum does indeed become much greener, most competitors should end up emulating the blockchain by moving to Proof-of-stake as quickly. By becoming more attractive, the Ethereum blockchain could increase its appeal to creators of new cryptocurrencies.
Conclusion: what to think of this huge merger on the Ethereum blockchain?
On paper, Ethereum blockchain officials are surely moving forward with this transition. But for now it remains to be seen how the ecosystem will behave after the switch to the new validation system. One of the fears is that problems will push transaction costs (gas fees) up to several thousand euros, as has sometimes been the case in the past.
We also wonder to what extent The Merge will really increase the number of transactions per second. Especially since an update supposed to implement the so-called “sharding” technology linked to this objective is planned for 2023. We also hope that this change will not cause (too many) bugs.
Finally, we can’t wait to see the actual power consumption figures for the Ethereum blockchain after The Merge – to verify if indeed the reduction in consumption is in the order of 95%.
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The Merge (Ethereum): all about “the merger” and its impact on crypto
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