Last updated on September 19th, 2022 at 11:39 am
The long-awaited Ethereum Merge has finally happened. It took place during the early hours of September 15. The merge has been the major talk of the crypto-space since it was announced.
Investors have already predicted that the merger could change the future of cryptocurrency and also boost the price of cryptocurrencies in general. The merge which was generally referred to as Ethereum 2.0 has been one of the most anticipated events in the crypto space.
With the term “Ethereum Merge” being thrown around recently, beginners might still find it difficult to understand what it is and why it is so important that it is gaining so much attention. You might be wondering what to do and how to get involved. In this post, I will be explaining in very simple terms what the merge is and how it affects you.
There has been major growth in crypto interest over the years. In 2021, the value of the overall crypto market doubled when Bitcoin reached its all-time high, peaking at $68,000 in November which rose attention and saw people investing their money in it and other top crypto assets like Ethereum, Dogecoin, and Binance Coin.
Whether you are a crypto expert or you own a bit of crypto in your wallet or you are a novice, you must have heard about the merge and maybe even followed the live event on Youtube yesterday.
Here is a brief breakdown of everything you need to know about it and what it means for the crypto environment, crypto prices, and more.
What is Ethereum Merge?
The Ethereum Merge is simply an upgrade to the Ethereum blockchain. Generally referred to as Ethereum 2.0 or serenity, it aims to improve the speed, performance, scalability, and also security of the Ethereum network.
Before the upgrade, Ethereum operated on a proof-of-work network which gave room for mining. It involved computer nodes that are a part of a larger network competing to solve complicated mathematical problems. Those who are successful with solving the problems are then able to mine the next transaction block to produce a new coin.
With the upgrade, it moved Ethereum from the Proof-of-work protocol to a Proof-of-stake mechanism which eliminates the mining part. The proof-of-stake is more environmentally friendly and also more energy efficient.
How To Participate in the Ethereum Proof-of-stake
As earlier mentioned, the upgrade eliminated mining, and so to participate in the new proof-of-stake, you have to be a “validator.” To participate as a validator, you will first need to deposit a total of 32 ETH which is around $50,000 at the time of writing this post. Once deposited, your validator will be activated and you receive new blocks from peers on the Ethereum network.
When did the Ethereum Merge Happen?
The merge has s been delayed severally in the past which made the status to become uncertain. But after many delays, the merge finally took place on September 15, 2022. The live merge party was streamed live on Youtube and over 41,000 people participated.
What prompted the Ethereum Merge?
The merge was done to reduce its energy consumption by around 99%. The proof-of-work consumes more energy than the POS model and the shift also helps to reduce the negative impact on the environment.
With the merger, Ethereum has been referred to as the “currency of the future” by Michael Saylor – executive chairman and a co-founder of MicroStrategy, as it also gives groundwork for other aspects of the crypto space.
Improvements of Proof-of-stake over Proof-of-work
The proof-of-stake mechanism comes with some improvements over the previous proof-of-work model. Some of these improvements are listed below:
- Reduced energy consumption: The new upgrade saves more energy than the proof-of-work model. Lots of energy is not needed for the POS validation.
- POS reduces hardware requirements
- Reduced risk of centralization: In the upgrade, proof-of-stake will see more nodes securing the network.
- Flexible design: The flexibility of the new proof-of-stake is attractive to protocol designers. A larger number of PoS networks can exist since they all use different resources for security and also different native tokens.
What does the Ethereum Merge mean for you?
According to the Ethereum website, If you are an Ethereum holder or you have the asset in your wallet, there isn’t any action you are required to take. It is just like a software upgrade.
However, the merger could offer a more friendly environment for newbies who are interested in crypto and it could also impact the prices of other crypto in the market.
Does the Merge Affect Ether Price?
After the impressive rise in prices in November last year that saw Bitcoin reaching its all-time high, cryptocurrencies, in general, have experienced a significant drop this year.
Whales are bullish and positive about the upgrade with expectations that it could shake up the price of Ethereum and see it rise significantly with time. Ethereum has also been outperforming Bitcoin during the recent recoveries.
This is mainly because of the news about the upcoming merger. Investors and fans of Ethereum are hoping that the merger will boost the price of Ether in the coming days.
We will just have to keep our fingers crossed and watch out for the impact.