“The Merge” of the Ethereum
Ethereum – the world’s second largest blockchain – has transitioned from the legacy “proof-of-work” to a “proof-of-stake” consensus mechanism.
- The Ethereum Merge is an upgrade that changes how new crypto transactions take place on the blockchain.
- The Ethereum Merge is the joining of the Ethereum’s proof-of-stake (PoS) Beacon Chain with the Ethereum Mainnet.
- Before this update, the Ethereum operated on a proof-of-work mode, which required nodes (computers that are part of a large network) to compete with one another to solve complex math problems. The successful ones are able to mine the next block of a transaction and create new coins.
- Through this method, crypto consumed power that is nearly equivalent to that of Finland, while its carbon footprint is almost comparable to Switzerland.
- The proof-of-stake model does not require the need for mining nodes to compete for block rewards.
- Rather, it requires node operators to stake 32 Ether (ETH) as collateral to become network validators to earn rewards.
- In the PoS model, users lock up their Ether in a pool through the process called staking.
- They are then randomly chosen to validate transaction.
- The nodes are chosen through an algorithm that has a preference for nodes having more of a network’s currency.
- This means that nodes’ “stake” is rewarded rather than the computer power as seen in the proof-of-work model.
- This model ensured a 99.95 per cent reduction in the consumption of energy by Ethereum. This amount of energy almost equivalent to the early energy consumption by New Zealand.
Ethereum is a decentralized, open-sourced blockchain. Ether is the native cryptocurrency of this platform. It is currently the second most popular after Bitcoin. The Ethereum blockchain powers the innovations in crypto ecosystem such as Non-Fungible Tokens (NFTs).