Soon, the criticisms against Ethereum should end with the much-anticipated merge happening on the 15th of September, 2022.
After 'the picture of apes' was traded for millions of dollars last year, the platform attracted brands and massive investments, turning all eyes on their negligence towards the planet. Of course, it's soon to change. The transition from its Proof-of-Work (PoW) consensus mechanism to the new and energy-efficient Proof-of-Stake (PoS) system is creating quite a lot of buzz in the crypto world, and rightfully so.
Proof-of-Work (PoW) How does it work?
With decentralisation came the abolition of a single gatekeeper of the database. While that had its perks, one major disadvantage was the aspect of security. There was room for fraud and double spending. To tackle this issue, Sakashi Nakamoto applied this consensus mechanism called Proof-of-Work, (first published by Cynthia Dwork and Moni Naor in 1999) while developing Bitcoin in 2009.
So, this extra step of confirmation is done by incentivising the miners. Their job is to verify the transactions before putting them on the ledger.
Miners (a group of people) compete amongst themselves to complete the confirmation of the transaction on the network with the help of their powerful computers (nodes). Upon which they get rewarded with cryptocurrency.
The process of verifying the transaction, which includes solving hash problems, is the root of all the criticism against its sustainable future.
Environmental Impact of PoW
The game of guessing
The constant procedure of trying to beat all the other computers to be the one to validate the transaction is an energy-intensive process. Back in the day, mining was still possible in the home. With every passing day, the guessing game is becoming more energy inefficient. Today it requires big powerhouses, powerful computers and large cooling systems to support mining.
The merge will be the first step toward showing everyone that the cryptocurrency world is well capable of functioning in a sustainable way.
What does Proof-Of-Stake (PoS) bring to the table?
Proof-of-Stake has several advantages compared to PoW, including energy efficiency. In this consensus mechanism, owners of cryptocurrencies lock a certain number of coins and create their own validator nodes. In this algorithm, participants who lock more coins are more likely to be chosen by the cryptocurrency protocol.
Unlike PoW, PoS doesn't bar you from entering, based on your energy consumption. In other words, you don't need top-of-the-line computers to become a validator. Also, any malice will result in the confiscation of the cryptocurrency that has been locked by the owner.
The merge is set to happen at 1 am ET, that is 10:30 am IST.
FAQs about the merge
-Why is it called the merge?
Because Ethereum already has a PoS System called the Beacon Chain and will merge it with its PoW mainnet which is called the execution layer.
-Will transaction speed increase?
-Yes, but hardly.
-Can I become an Ethereum validator?
-Yes, if you have some Ether to lock.
-Will the merge stop the network for some time?
-No, highly unlikely.
-What is a fork?
-When any change is made in the protocol it generates some noise and reluctance in the network resulting in a creation of a new blockchain in some cases. Its like certain members of a political party quit the party to make a new political party of their own. Hope that made things clearer.
Conclusion
The PoS sounds like quite an improvement but its execution will give us a clearer picture. Having said that, it's always good to see a community take baby steps toward a better world. Crypto Finance newsletter, Bankless posted a list of no fewer than 6 watch parties organized for this monumental merge. Make sure to join one online.
"Picture of an ape" trading for dollars, people watching a digital currency platform merge like its Super Bowl, "and I think to myself, what a wonderful world."
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