In September 2022, the Ethereum network will significantly change- it will transition from using a proof-of-work (PoW) consensus algorithm to a proof-of-stake (PoS) one. While the Ethereum merge may not mean much to Ethereum users and traders on the surface, it’s a big deal for the network.
The long-awaited merge will finally take place on or around September 15th. It is expected to be one of the most significant upgrades the blockchain has seen since The DAO hard fork. Ethereum’s consensus mechanism was originally a proof-of-work scheme, just like Bitcoin. However, since the creation of the blockchain, Ethereum has been slowly moving away from PoW and towards proof-of-stake (PoS).
Why is this Ethereum Merge so crucial for the crypto industry?
When The Merge occurs, entities called ‘validators’ will take over Ethereum’s transaction validation from miners. This shift will mean that the network won’t be as reliant on miners to keep everything running smoothly. Instead, a group of validators will work together to ensure that all transactions are legitimate. This change could help Ethereum become more scalable and efficient.
The Ethereum Foundation provides six distinct advantages that come along with this merge, with one of the most popular reasons being “better energy efficiency.” Though there are other benefits, this is generally the most cited reason why people believe the shift will be good. The Foundation’s summary also says that the consensus mechanism allows everyone to join the network without requiring high-end resources and hardware. The idea of POS makes it more accessible and democratic for people who want to be a part of the Ethereum community and ecosystem.
With the Ethereum merge, the blockchain is ready to upgrade next month, which would help with some of the network’s current scalability and energy efficiency issues. The update would also speed up processes and make cryptocurrency transactions more affordable. The merge will also result in the upgraded code, transactions will be quicker and less expensive, and the system’s architecture will become more efficient. As a result, users won’t have to pay high fees for simple activities like buying and selling cryptocurrencies.