What is The Merge Ethereum? Potential to Save Crypto Market
All eyes in the crypto space are now on The Merge Ethereum. This event is important for Bitcoiners and everyone. Then, how important is this Ethereum Merge?
After years of delay, The Merge Ethereum is in sight. This event formerly known as Ethereum 2.0 could happen, when the Ethereum mainnet Proof-of-Work will join (merge) with Beacon Chain Proof-of-Stake which is likely to occur as soon as September 15 next.
What is The Merge Ethereum?
In short, The Merge is a serious step towards addressing the issues of scalability, efficiency, and transaction speed. In method Proof-of-Stakethe party who acts as the transaction validator will only need to lock (stake) a certain amount of ETH tokens to contribute.
This is much more efficient than having to run a computer with a graphics card that wastes energy for 24 hours non-stop to do mining.
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To initiate this process, Ethereum will integrate two independent blockchain chains that exist in its ecosystem: a PoW-based execution layer and a PoS-enabled consensus layer (Beacon Chain). So, it’s called merge (merging) two chain layers and fully PoS.
What is the Ethereum Beacon Chain?
Beacon Chain is an independent network that allows chain PoS to work concurrently with PoW chains without affecting the others. Beacon Chain has been running since December 2020.
The Merge itself will specifically refer to when Beacon Chain PoS operates completely replaces chain PoW as the primary mechanism for consensus and validator.
If you want a free analogy, the Ethereum Foundation itself calls this event something like:
“Imagine Ethereum is a spaceship that isn’t quite ready for interstellar travel. With Beacon Chain, the community has built a new engine and a hardened fuselage. After significant testing, it was almost time to replace the new engine with the old engine in mid-flight.”
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More Energy Saving
The Merge will make the Ethereum blockchain approximately 99% more energy efficient, and will set the stage for future upgrades that make it faster and more scalable.
In theory, that should be great for Ethereum (both the network and the assets). Whether the price of ETH actually increased after The Merge, or not is something that is difficult to predict.
But the most interesting part of all of this for me is how it will affect all other crypto assets and blockchains. Like, the Ethereum network hash rate immediately drops to zero, as proof-of-work mining on Ethereum is coming to an end.
That may put more public pressure on Bitcoin’s massive energy use, something analysts acknowledge Bitcoiners, like Dan Held. This would also leave Bitcoin (without Ethereum as a co-player) in the eyes of regulators targeting blockchain Proof-of-Work energy intensive.
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There are potential implications for altcoins others, especially the so-called ‘Ethereum killers’ such as Solana, Cardano, Avalanche, and Polkadot.
Perhaps many hope that the successful The Merge Ethereum will benefit crypto assets Proof-of-Stake other. And so far it’s proven, many of them have had a healthy price increase in the past week, perhaps thanks in part to buzz The Merge.
But the reverse is also possible: Many of these Ethereum challengers are pitching themselves as a more eco-friendly alternative to Ethereum. Once Ethereum runs a proof of stake, they lose part of their value proposition.
