The fusion or ‘Merge’ of Ethereum is already here. Tonight there has been the expected change in the second largest cryptocurrency by market capitalization.
Surely if you are interested in the subject you are already aware in general terms of what it entails. But what does this mean for potential small investors or anyone who just wants to stay on top of what’s going on in crypto?
A more sustainable and cheaper Ethereum, but not anymore
The main change is the change from the so-called ‘proof of work’ to ‘proof of stake’. In other words, the validation of new cryptocurrencies and their transactions will leave aside the mining (work) to take over the already mined ethereum.
For some time, it has been rumored that this upgrade will make Ethereum faster, cheaper, and environmentally sustainable, since mining required significant energy expenditure. But this is not true, at least not yet, according to the Ethereum Foundation.
The validation test or ‘proof of stake’ has a different operation, but it will require filming. Instead of using miners, validators are needed. Validators can be anyone with at least 32 ETH available to “validate,” or commit, to the network. Users can also participate with smaller amounts of ETH through validation pools or cryptocurrency exchanges.
This way of doing things is a solution to energy consumption and the Ethereum Foundation claims that it will make the network more than 99% more energy efficient.
But today’s update does not solve other issues related to Ethereum’s performance and capacity (i.e., the number of transactions that are processed per second) and what can make a cryptocurrency useful as safe and useful money in the long run.
A change that will not give you speed and that some fear will weigh down your security
Ethereum’s move to a new consensus mechanism will mean a more energy efficient blockchain, but this does not mean that Ethereum transactions will be faster.
Why? Because moving to proof-of-stake will only mean that blocks are produced about 10% more frequently than with proof-of-work, according to the Ethereum Foundation. It is not a significant change.
Fast transactions on Ethereum would be nice, of course: just like buying things with a credit card online, it gives you peace of mind when the transaction is done quickly. But with a blockchain network, things are supposedly less traceable and more secure, but they will still be slower.
“Although there are some slight changes, the speed of transactions will remain largely the same at layer 1,” says the . This is a fairly insignificant change and is unlikely to be noticed by users.
It won’t be cheaper to use either.
Many think that the move to proof-of-stake will lower Ethereum’s well-known gas or ‘burn’ fee, the costs associated with conducting transactions. This is expected to be achieved, but not with this update, but with the following ones that we already explained here, .
Many apps and cryptocurrencies are powered by the Ethereum blockchain. This means that often to do things with such apps, you will need some Ethereum to pay for the transaction. That is the so-called gas.
But contrary to what you might think, this week’s update will not make Ethereum cheaper to use. “The Merger is a change in the consensus mechanism, not an expansion of network capacity, and will not result in lower gas rates,” the foundation clarifies again.
This step, in short, is important within the Ethereum plan, but its users will not notice it too much, for better or for worse, unless those who predict that the cessation of mining could compromise network security were right.
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