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The transformation of Ethereum into a carbon-neutral generated digital currency is expected to cause severe disruption in the crypto space. Ethereum is currently the second largest cryptocurrency in the world after Bitcoin.

According to Ethereum developers, the upgrade will result in securing and scaling the network as the platform is currently home to a $60 billion ecosystem of cryptocurrency exchanges, lending companies, of NFT markets and applications.

Called the merger, the process saw the popular currency move its main digital machines to an energy-efficient system.

The event took years of research and development and involved Ethereum’s transition from its original “proof-of-work” blockchain to the more sustainable “proof-of-stake” blockchain.

Explaining the process, Ethereum Foundation researcher Justin Drake told the world’s leading crypto exchange, said Coinbase that the transition was extremely complicated. “The metaphor I use is this idea of ​​replacing an engine with a running car,” he said.

While the intention to transition Ethereum to a greener phase was a long-term plan in the making, even those at the helm had doubts about it because the process was so risky. “There’s a part of me that hasn’t fully realized this is actually happening,” Drake said. “I’m kind of in denial, you know, because I trained myself to expect this to happen in the future.”

The sheer complexity of the update means it may also be one of the biggest open source software events in history. The process required massive coordination between many teams as well as hundreds of researchers and developers.

A new green future for crypto

According to experts, this decision now means that Ethereum will consume 99.9% less energy than before the merger. A comparative example would be, according to Coinbase, if Finland were to shut down its power grid entirely.

Ethereum’s proof-of-work system, based on and pioneered by Bitcoin, forced crypto miners to compete to write transactions to its ledger, earning rewards by solving cryptographic puzzles. Crypto mining requires warehouse-sized research farms powered by high-capacity computers running at full speed while trying to generate the currencies.

Will Bitcoin be overtaken by Ethereum?

The impact of the merger on other major cryptocurrencies could therefore be dramatic. As investors increasingly turn to carbon-neutral opportunities, energy-intensive cryptocurrencies have been overlooked.

Indeed, the potential impact of the merger on the digital economy is such that experts are watching the resulting changes with concern. The process has been so complicated that there is a level of risk even now that the platform is in transition.

As Teunis Brosens, Chief Economist for Digital Finance and Regulation at ING, notes, “Ethereum’s migration from PoW to PoS could be the biggest event in crypto this year. The migration itself and its aftermath carry risks and will be closely watched within the crypto community. A successful migration will be a compliment to the ability of the Ethereum community to handle large events. It will also remove a significant barrier to the acceptability of Ethereum by regulators and therefore to the development of Ethereum-based services by traditional financial institutions.”

Brosen continues, “We anticipate this development could put Bitcoin on the defensive in terms of potential mainstream finance adoption. The bitcoin community is conservative and we don’t see Bitcoin moving from PoW to PoS anytime soon.

Nigel Green of the DeVere Band also predicted a surge in interest in Ethereum due to the merger and described the event as a “momentous day for crypto.”

Green says: “Reducing energy consumption will be the main reason because it will become much more attractive to institutional investors, who bring with them enormous capital, expertise and reputation.

“Those institutional investors who had been left on the sidelines are now likely to move in.”

He goes on to add, “In addition to having a more positive climate impact, the effect of the merger in reducing supply, reducing costs and accelerating transactions will also attract individuals and institutions. .

“Due to the significance of the merger, we expect the developments to provide some price support across the broader crypto market.”

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