Ethereum Merge, the most-awaited crypto event this year, has finally taken place. Ethereum co-founder Vitalik Buterin confirmed the news on Twitter on September 15. After months of speculations and waiting, the Ethereum network has finally switched over from a proof-of-work (PoW) model to a proof-of-stake (PoS) system. Among other things, this will bring a 99 percent reduction in energy consumption on the Ethereum network, marking a valuable step forward toward a green blockchain. So, what is the Merge all about? And more importantly, why should you care?
Ethereum Merge is done: What does it bring to the table?
First, let us understand what PoW and PoS are, and how the difference between them matters.
In the world of crypto, PoW is a proof that allows one party to let others know that a certain amount of computation effort has been used, which can be verified later on with a minimal effort. On the other hand, PoS is a consensus mechanism that validates block transactions based on the number of coins a validator stakes.
PoS will see users offer, or stake, their own coins as collateral in order to validate their blocks. Users who stake coins are called validators. These validators are chosen at random to validate the block, or ‘mine’. This reduces competition among stakeholders.
In the case of PoS, processing doesn’t use up much energy, transactions are comparatively cheaper, and importantly, it is safe from a major attack on the network, as the compensation structure is designed in a way that renders an attack less advantageous.
Ethereum Merge: What is the crypto industry saying about it? Should you invest in ETH now?
Buterin called the Merge a “big moment” for the Ethereum ecosystem, as he announced the news of the Merge getting finalised.
And we finalized!
Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today.
— vitalik.eth (@VitalikButerin) September 15, 2022
CoinSwitch Kuber co-founder and CEO Ashish Singhal called the Merge a “great example of perseverance”. “Ethereum’s transition to a proof of stake, or a greener blockchain, was first proposed in 2014. But it got delayed, then again, and then again. It even became a meme — ‘Wen Merge’. But the developers and community kept building, kept iterating. Finally, on September 15, 2022, it happened: A greener, more secure Ethereum is here. The Merge is complete. A greener Web3 is a reality.”
“Moral of the story: Keep BUIDLing. Success will follow,” Singhal added.
“Ethereum is taking one of the biggest revolutionary steps ever taken by any crypto or blockchain. The news of this merger has increased the hashing power by nearly 200 percent in just the last 30 days,” said Unocoin co-founder and CEO Sathvik Vishwanath. “From a technical point of view, this shift might take longer than estimated and can take any turn out of predictions. With the new mechanism in place and shifting the entire algorithm might have its own consequences and right now it’s too early to predict if it’ll be negative or positive.”
Vishwanath added, “The effect of this news has been speculated on Ethereum price as the prices have been falling for the last week by approximately 6 percent. Considering the situation, many exchanges including Unocoin have disabled Ethereum and Ethereum-based coins and tokens deposits and withdrawals.”
The Unocoin chief advised investors that Ethereum and Ethereum-based coins and tokens might be highly volatile now and “any uncalculated risk might prove to be fatal”.
Prashant Kumar, the founder and CEO of weTrade said that the Merge does make the Ethereum blockchain more energy efficient, “increasing scalability, improving the speed of computations, and reducing costs.”
“The momentous event is a culmination of months of meticulous planning and test runs that can be compared to the challenge of changing the engine of a 24-wheeler loaded truck while it is on the move. With a successful merge, Ethereum can await new investors as it transitions to this 2.0 version.”
Edul Patel, CEO and co-founder of Mudrex, said, “[The Merge] is one of the most significant events in the crypto space. The upgrade of Ethereum from PoW to PoS is crucial as it will reduce Ethereum’s energy consumption by over 99 percent.”
“The Ethereum blockchain will now achieve its target of higher scalability, greater security, and cutting down energy consumption significantly,” Patel added.
Changpeng Zhao, the CEO of world’s largest crypto exchange by trading volume, Binance, simply tweeted, “We are still here”.
Merge successful. POS activated.
We are all still here.
— CZ 🔶 Binance (@cz_binance) September 15, 2022
Ethereum (ETH) price today
Following the news of the Merge, the price of Ethereum hasn’t shown much of a change yet. At the time of writing, ETH price saw a jump of 0.18 percent in the last hour, and a total gain of 1.68 percent is seen in the last 24 hours. As per CoinMarketCap data, ETH price stood at $1,623.70. As per Indian exchange WazirX, ETH price stood at Rs 1.39 lakhs.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.