- What is the ETH merge?
- Why is the ETH merge important?
- What are the differences between Proof of Work and Proof of Stake?
- Will ETH fees reduce after the merge?
- Will Ethereum transaction speed improve?
- Will ETH price increase?
- I have ETH, what must I do after the merge?
- Can I be among the ETH stakeholders that approve or disapprove a block?
Many ground-breaking developments happen in the crypto space now and then, but the proposed ETH merge may be the most revolutionary idea anyone can witness in the crypto industry.
Do you know about the ETH merge or the possibilities it brings to the blockchain world? This article will show why the ETH merge could be a big deal.
What is the ETH merge?
Before this move, speculated to hold around September 15 this year, Ethereum processed transactions using the power-expending PoW (Proof of Work) algorithm. However, the merge will see Ethereum fully transition from the Bitcoin-pioneered PoW algorithm to the PoS (Proof of Stake) algorithm.
Interestingly, Ethereum had proposed the PoS network (called the Beacon Chain) in 2020, but the team didn’t process transactions with the network. Instead, it was a staging area preparing the Ethereum ecosystem for a PoS network upgrade.
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Why is the ETH merge important?
Crypto critics often come against the industry, making claims about its volatility and extreme power consumption. While the issue of volatility may need readdressing, the inflated rate of crypto power consumption is undeniable.
With the merge, crypto energy consumption will drastically reduce up to 99 percent. Moreover, this development will positively influence the energy sector, our physical environment, and the fees included in crypto transactions.
What are the differences between the PoS (Proof of Stake) and the (Proof of Work) algorithm?
The proof-of-work algorithm is the pilot method for verifying blocks in a blockchain transaction. And so, the earliest cryptocurrencies like Bitcoin and Ethereum use the PoW algorithm.
The PoW algorithm consumes large amounts of energy when processing a block. The reason for the enormous power consumption is the amount of work needed to solve complex computational or mathematical questions.
After a complex math question is solved, the block is verified, and the miner gets more tokens as a reward. On the other hand, the PoS algorithm does not rely on solving complex computational puzzles to mint coins. Instead, computers on the blockchain with the highest stakes determine whether a block is verified.
On the Ethereum blockchain, stakeholders with $50,000+ worth of ETH can participate in verifying blocks, resulting in a massive reduction of the typical computational energy required to verify blocks.
Will ETH transaction fees reduce after the merge?
Ethereum transaction fees will remain the same, primarily because the payments do not depend on the Ethereum mainnet. Other third-party platforms have lower ETH processing fees, Arbitrum and Optimism. These platforms process ETH transactions away from the Ethereum mainnet.
With the introduction of network updates – danksharding and proto-danksharding – the Ethereum network may see a significant slash in transaction fees. However, that’s a development we may not see until 2023.
Will Ethereum transaction speed increase because of the merge?
Unfortunately, the transaction speed will only increase by a fraction after the merge. With the PoW algorithm, blocks take 13-14 seconds to process. But the merge promises 12 seconds per transaction, which is relatively insignificant.
Will ETH prices go up after the merge?
Nobody can say for sure whether ETH prices will rise or fall. The merge comes with many uncertainties that make it difficult to predict the price. A significant uncertainty is the security of the PoS system in contrast with the PoW algorithm.
However, the massive energy reduction and the change in how ether is distributed are likely positive trends that can significantly increase the price of Ethereum.
I have ETH; what must I do after the merge?
Ethereum users don’t have to do anything after the merge, as it won’t affect their holdings. The significant change the merge brings is in how the blocks are verified, which has nothing to do with existing users.
Can I be among the ETH stakeholders that approve or disapprove of a block?
Any user with ETH holdings worth $50,000 or more can participate in the PoS governance protocol. Although, your holdings won’t guarantee that you must verify the block, as the system chooses the node with the highest stake.
The ETH merge is revolutionary for the Ethereum blockchain and our physical environment. But more than that, it might just be the move that changes how people perceive blockchain and cryptocurrencies.
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