Ethereum‘s ‘merger’ marks a new era for cryptocurrencies that could turn it into the No. 1 coin in the world. 1 in the market.
Currently, the second largest cryptocurrency in the world has undergone a significant transformation which is expected to radically change its technology by reducing carbon emissions by more than 99.9% according to the latest report of the Ethereum platform.
This transition known as “The Merge” has been finalized, Ethereum founder Vitalik Buterin confirmed on Thursday.
“And we’re done!… Happy merging folks! This is a huge moment for the Ethereum ecosystem,” he wrote in a Twitter.
This means that Ethereum’s blockchain technology has improved from the energy-intensive model used by its rival Bitcoin.
Since the news of this move became public, the value of the Ethereum currency Ether (ETH) doubled in a short period of 2 months.
What is ‘Merging’?
The first part of The Merge upgrade started on September 6 with the Bellatrix system.
This change will see Ethereum move from the electricity-intensive PoW (Proof-of-Work) model to the PoS (Proof-of-Stake) model. Both mechanisms are used to confirm transactions and add new blocks to the chain known as blockchain, but they work differently.
The PoW system works like a highly competitive numerical game – and the first person to solve this game or ‘puzzle’ is compensated with a certain amount of cryptocurrency for each verified transaction.
This type of system consumes a tremendous amount of electricity as in order to function it requires a global network of computers to be running at the same time as a cryptocurrency transaction takes place in every corner of the world.
Meanwhile, in a PoS system, you don’t need as much power-intensive hardware as the number of coins.
So, if with the PoW system, the power of your machine or hardware increases your chance of winning (or settling) as many transactions as possible, with the PoS system, the only thing that increases your chance of winning is simply the number of your coins.
Will it overtake Bitcoin?
For some yes. For others, even though Ethereum may be cleaner for the environment than Bitcoin, it is unlikely that an improved Ethereum will reach the top spot in the crypto market.
“Bitcoin will always be like digital electronic gold. And Ethereum is like fiat money, it’s just two completely different things,” Marchesoni said.
The logic behind this reasoning is that Bitcoin is programmed to have a fixed number of coins. At any given time, there can only be 21 million Bitcoins in circulation. This is why it is compared to the economic model based on gold.
While Ethereum does not have this limitation, it is also compared to the current economic model that is FIAT, where our currencies such as the dollar, euro, yen, etc. are not based on any real value such as the amount of gold or silver in circulation.
This one decision, which was taken by American President Richard Nixon in 1971, which completely changed the course of things, but this is a discussion for another time.
It remains to be seen if Ethereum will become the new Bitcoin, especially at a time when most governments are against digital currencies precisely because of the high amount of energy they consume.
Now, only time will tell if Vitali will manage to take the top spot from the anonymous creator of Bitcoin with the strange name Satoshi Nakamoto.