Starting around mid-September, the Ethereum blockchain will undergo a major shift, known as ‘the Merge’, affecting how transactions are verified on the most widely used crypto platform. The current Mainnet that contains every transaction, smart contract, and balance since it began in July 2015, which uses “proof of work”, will be merged with the Beacon Chain, which uses “proof of stake”.
The change will give the network to “more scalability, security, and sustainability” according to Ethereum. Proponents of the new system say it will be more egalitarian than the current method of mining because there will be a lower barrier to entry.
Why Ethereum is carrying out ‘the Merge’
Currently, Ethereum infrastructure uses “proof of work” like Bitcoin to verify crypto transactions and maintain the decentralized ledger. Miners compete with each other to be the first to solve complicated puzzles to add new blocks of data to the blockchain.
This is highly energy intensive consuming vast amounts of electricity, in the case of Ethereum and Bitcoin combined, their consumption is slightly less than that of Indonesia. By switching to “proof of stake” it could reduce the amount of energy needed to reach a consensus for new blocks to the Ethereum blockchain by over 99.9 percent.
Instead of miners competing, validators place a minimum stake of 32 Ethereum digital coins to participate in the validation mechanism. The larger the stake a validator puts in the better chance they will have of being selected to check that new blocks propagated over the network are valid and thus the monetary reward that comes with it.
However, if a validator behaves in an improper way, their stake can be destroyed. The economic penalties in “proof of stake” should make the blockchain more secure by increasing the cost for a potential perpetrator of a 51-percent attack, which is when miners with majority network control can interrupt the recording of new blocks. Likewise, the…
