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Ethereum Successfully Completes Historic Merge to Proof-of-Stake
After years of delays, considerable criticism and untold hours of work, the Ethereum blockchain successfully merged to a new, more-energy efficient consensus mechanism late last night.
The upgrade process, referred to as the Merge, took place at approximately 4 am EST last night without any significant issues.
The merge switch represents a historic moment for crypto as Ethereum, the second biggest cryptocurrency, now operates using 99% less energy thanks to proof of stake technology.
Developers were understandably thrilled that the upgrade took place without issues but it wasn’t exactly a surprise as the beacon chain has been operating successfully next to the Ethereum mainnet for the last year and several test nets had already completed the merge transition successfully.
Still the transition to proof of stake from a proof of work chain is relatively new ground for cryptocurrency and has been likened to swapping out the engine on a plane while it’s in the air.
Price Dips After Merge
Investors were split on how price action might play out after Ethereum completed the merge.
There were notable pundits who believed this was a classic “Sell the News” event where investors would accumulate Ethereum on the way up to the Merge and then quickly sell after the event was complete.
Another crowd believed that with Ethereum might pump after the merge thanks to issuance getting massive reduced and the exponential increase in energy efficiency.
So far the bears appear to be more or less correct as Ethereum is down roughly 5% in the last 24 hours at the time of publication.
It’s difficult to say if it’s just Ethereum, however, as the entire crypto market is flagging today. Basically there hasn’t been a huge change to price so far.
What Happens Next?
The merge to proof of stake for Ethereum represents a momentous day in crypto history but it’s hardly the end point for improving Ethereum.
Ethereum founder Vitalik Buterin has gone on record saying he considers the project only 55% complete after the merge.
The new Ethereum (originally referred to as ETH 2.0) is far more energy efficient and theoretically more scarce but there are still some nagging problems.
The next big issue is scalability. Ethereum wants to be much faster and cheaper for transactions. The team plans to do that with the introduction of Sharding, which will work with Layer-2s to massive scale throughput for ETH.
To put things in context Ethereum can currently process 15-20 transactions a second and the team is hoping to get that number up to 100,000 in coming years. At some point in the next 6-12 months the team will also allow stakers to finally un-stake and potentially take some profits.
For the time being, however, the Ethereum merge is proof that a cryptocurrency project can dramatically improve itself over the years.
Learn more about about the merge in our Ethereum articles:
