Cryptocurrencies are often criticized for being one of the biggest culprits in climate change, but that is all about to change, thanks to Ethereum’s new transition from proof-of-work to proof-of-stake. This small play on words may seem insignificant but it will alter the way the second largest blockchain operates across the world.
How Bad Is It Really?
Just last year, the University of Cambridge released a startling report that Bitcoin was using more energy through its transactions than the entire country of Denmark. And in a 2019 study reported by Reuters, bitcoin mining belches out between 22 and 22.9 million metric tons of CO2 every year.
The issue here is the incredible amount of energy needed to power the thousands of computers validating the Ethereum network transactions. Most of these computers are based in USA, Russia, and Kazakhstan, which require energy to power the Ethereum network. And so that is where the genius founder of Ethereum, comes onto the stage.
Vitalik Buterin quickly identified a major problem with Ethereum and its massive use of energy. And so starting from 2020, Ethereum has been working laboriously to move from the protocol that powers Bitcoin into one that will require, 99.5% less energy than its predecessor.
What Does This Mean for Crypto?
Well quite a bit, because of its significant change in protocol and usage, not only will Ethereum become cheaper to use for retail but it will also pave the way for additional investment from institutional investors who are looking to attach themselves to both an environmentally sustainable project and one that is profitable as well.
Above all else, however, will be the great discount in usage prices that will rain across the entire Ethereum ecosphere. No longer will it cost $100 simply to mint or purchase an NFT, this cost will drop down to just a few dollars and possibly a few cents. Depending on how Ethereum chooses to allocate and price its services with the new proof-of-stake protocol.
Beyond the inventible price drop in the use of Ethereum, the change is largely symbolic as well. Because at the end of the day, crypto is supposed to be the better option when it comes to finances and trading, from energy usage to privacy, to ease of use. And so this major change to the second largest crypto platform must accurately describe this philosophical shift in how we do business in the crypto markets.
What Exactly Is The Merge?
Eth2, Ethereum 2.0, ETH 2.0…The project has been called many things in the past, but earlier this year the Ethereum community settled on the “merge.” So what exactly is this new imagining of crypto’s second largest platform?
Minus the technical details and the very long-winded makeup of how this will occur on the programming end, let’s just talk about what it is without all the bells and whistles that often accompany a new technology and its description.
Most simply, the merge is a long-planned Ethereum upgrade aimed at improving the network. Such upgrades are commonplace, but this is the most important one to date, and its success will pave the way for developers to introduce a host of new features to the network.
The merge will, well, merge the current Ethereum main net—or the main public Ethereum blockchain used by everyone—with something called the Beacon Chain. Currently, both chains exist in parallel. But only the Ethereum main net, which currently uses a mechanism called proof of work, is processing transactions. And this, my dear reader, is how we will lift ourselves out of the crypto winter.