The Ethereum Merge has finally happened, moving the digital machinery at the core of the second-largest cryptocurrency to a vastly more energy-efficient system after years of development and delay.
It was no small feat swapping out one way of running a blockchain, known as proof-of-work, for another, called proof-of-stake. “The metaphor that I use is this idea of switching out an engine from a running car,” said Justin Drake, a researcher at the non-profit Ethereum Foundation who spoke to CoinDesk before the Merge happened. “I like to think of it as kind of like the switch from gasoline to electric.”
The payoff is potentially gigantic. Ethereum should now consume 99.9% or so less energy. From an energy costs perspective, it’s like Finland suddenly shut off its power grid, according to one estimate.
Ethereum’s developers say the upgrade will make the network – which houses a $60 billion ecosystem of cryptocurrency exchanges, lending companies, non-fungible token (NFT) marketplaces, and other apps – more secure and scalable, too.
The idea was there from the start that Ethereum would eventually make the switch to proof-of-stake. But the transition was a complicated technical effort – an endeavor so risky that many doubted it would happen at all.
“There’s a part of me which hasn’t completely realized that this is happening,” Drake said. “I’m somewhat in denial, you know because I’ve trained myself to just expect it to happen in the future.”
When the Merge officially kicked in at 2:43 AM EST, over 41,000 people were tuned in on YouTube to an “Ethereum Mainnet Merge Viewing Party.” They watched with bated breath as key metrics trickled in suggesting that Ethereum’s core systems had remained intact. After around 15 long minutes, the Merge was officially finalized, meaning it could be declared a success.
The update, which ends the network’s reliance on the energy-intensive process of cryptocurrency mining, has been closely watched by crypto investors, enthusiasts, and skeptics for the impact it is expected to have on the wider blockchain industry.
Mark Cuban, investor and billionaire owner of the Dallas Mavericks basketball team, told CoinDesk he would be “watching [the Merge] with interest like everyone else,” pointing out that it might make ETH, the network’s native token, deflationary.
In the minutes immediately following the Merge, ETH – whose current market value near $200 billion makes it the second-largest cryptocurrency after bitcoin (BTC) – was trading at $1,632, down about 0.4% in the previous 24 hours.
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The update’s complexity was compounded by the fact that it may have been one of the largest open-source software endeavors in history, requiring coordination across dozens of teams and scores of individual researchers, developers, and volunteer
Tim Beiko, an Ethereum Foundation developer who played a key role in coordinating the update, said to CoinDesk, “I think the Merge can genuinely get those people who were interested in Ethereum, but skeptical of the environmental impacts, to come and experiment with it.”
The historic upgrade casts aside the miners who had previously driven the blockchain, with promises of massive environmental benefits.
CREDIT: CoinDesk / Sam Kessler