“The Merge”, the ecological revolution of the Ethereum blockchain

Ethereum

After several years of preparation, the Ethereum blockchain, the second largest after the Bitcoin blockchain, is expected to undergo a fundamental transformation, which will allow it to drastically reduce its energy consumption.

Facts

  • Created in July 2015, this decentralized exchange protocol relies until now, like Bitcoin, on a validation of transactions or the manufacture of “token” (token) by the method of “Proof of Work” in English (“Proof of Work”).
  • This method will be replaced by the “Proof of Stake” where validators will have to place a bet of 32 Ether, the cryptocurrency associated with Ethereum, in a common pot in order to receive the reward.
  • Thousands of Ether’s “miners” will therefore find themselves fatally unemployed
  • The transition from an old protocol to a more modern one involves technical risks despite numerous tests beforehand and the big platforms like Binance or BitPanda have planned to freeze exchanges during the migration.

Issues

  • Drastically reduce the energy bill: The old proof-of-worksystem, which is still the protocol used by the Bitcoin blockchain, requires a great deal of computing power and therefore powerful installations such as servers and graphics cards to “mine”, i.e. validate a block of encrypted and secure data. If the merger succeeds as planned, “Ethereum’s electricity consumption will drop by 99%” assures us Joe Lubin, co-creator of Ethereum and owner of ConsenSys, publisher of the MetaMask wallet, among other things.

 

  • A completely decentralized operation: The upgrade to Ethereum 2.0 is completely decentralized. “It’s not a company behind it, but many developers scattered around the world who want to prove that this network has a future. The major players in the sector have not hesitated to delegate part of their teams on this major project.

Perspective

  • The carbon footprint of blockchain is one of the main topics of criticism of this technology. This migration from Ethereum could, over time, increase the acceptability of blockchain and all applications that rely on it, by policymakers and regulators, anticipates Dutch bancassurer ING in a recent note.

  • Faced with the end of their activity, many miners have expressed their dissatisfaction with this transition. Because of this, some miners went as far as announcing the creation of a fork that will keep the Proof of Work. Since then, this fork is called “EthPow”, and its token is the “ETHW”.
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