The second largest blockchain network after Bitcoin, Ethereum has completed the transition from Proof of Work to Proof of Stake. One of the biggest developments in the crypto world dubbed “merger” occurred on September 15th at around 1:30 pm according to IST. The entire world was eagerly waiting to see the merger.
Announcing the huge achievement of the Ethereum merger, Vitalik Buterin, the founder of Ethereum, tweeted on her official Twitter account and wrote: “We are done! We wish you to integrate everyone. This is a huge moment for the Ethereum ecosystem. Everyone who helped make the merger should feel proud today “.
And we’re done!
We wish you all included. This is a huge moment for the Ethereum ecosystem. Everyone who helped make the merge should feel proud today. – Vitalik.eth (@VitalikButerin) September 15, 2022
Here is all you need to know about the merger:-
What is Proof of Work and Proof of Stake?
Untangling terms related to the world of cryptography, let’s understand each one by one. Both are algorithms used to allow users to add new cryptocurrency transactions or block to keep a record on the blockchain network.
Under the proof-of-work method, auditors (the person who verifies transactions) need to solve complex mathematical puzzles. Running computers requires a huge amount of energy and it has to be done in every transaction. Therefore, the method was very energy consuming.
On the other hand, under proof of ownership, validators need to own a large stake in the blockchain to validate transactions. This means that Ethereum users will have to make a significant investment in the cryptocurrency in order to validate transactions.
Why does this happen?
Older method – Proof of Work consumes huge power to run huge computers that users use to authenticate transactions. Whereas the new method – Proof of Stake, according to some reports, consumes 99% less power because it does not need to solve complex mathematical problems for authentication. Ultimately, Ethereum makes itself an eco-friendly and planet-saving blockchain system.
Ethereum founder Vitalik claims that the merger will reduce worldwide electricity consumption by 0.2%. Blockchain has long been condemned for polluting the environment and wasting a huge amount of energy.
How will it affect Ethereum users and potential investors?
Sooner or later, investors and users will see good benefits in the future. More users may eventually add faster transactions and lower costs, which could have an impact on the price of Ether, the platform’s native cryptocurrency that investors use to transact.
Besides, users need a certain amount of Ethereum to authenticate transactions which means hackers will not easily come into the blockchain network. They have to invest first to hack the network. It will make the network more secure and robust. Ultimately, bitcoin is forced to take such actions.