By Farzad Vajihi – Analyst of stock market and cryptocurrency, Ph.D. in economics.
The long-awaited Merge upgrade has finally updated Ethereum to the Proof-of-Stake algorithm. The new Ethereum is expected to be much faster, cheaper and more efficient. But what is Merge exactly, and why do so many experts believe that the launch of Merge is one of the most important technological breakthroughs in the history of crypto?
Ethereum Merge is a long-awaited upgrade of the ETH blockchain that was launched on September 15th. According to many crypto experts, Merge is not only the most important upgrade in the history of Ethereum, but also one of the most significant events in the history of blockchain technology in general.
The most important aspect of the Merge upgrade is switching Ethereum from Proof-of-Work (PoW) to a Proof-of-State (PoS). But what do these two technical terms really mean?
Proof-of-Work is the original cryptocurrency algorithm that was first implemented in Bitcoin (BTC) and until September 15th was also used by Ethereum. Proof-of-Work is extremely secure and very decentralized, but it also has serious disadvantages. Most importantly, PoW blockchains consume tremendous amounts of electrical energy to function.
Proof-of-Stake is different. The PoS algorithm is much more advanced than PoW, and doesn’t require any specialized hardware or large amounts of energy. Because of that, Proof-of-Stake blockchains consume 99% less electricity than Proof-of-Work blockchains, which makes them very eco-friendly. But that’s not the only advantage of Proof-of-Stake!
With the launch of the Merge upgrade, Ethereum has become a green blockchain that has a very low carbon footprint and is friendly to the environment. This will likely become very important in near future, because many governments in the world are considering regulations aimed against energy-consuming Proof-of-Work blockchains.
However, that’s not the only benefit of the Merge. Switching to Proof-of-Stake will also give ETH investors and owners of ERC-20 tokens built on Ethereum many immediate advantages.
Most importantly, all Ethereum transactions are now expected to be much cheaper. Before switching to Proof-of-Stake, ETH was known for its notoriously high transaction fees. After the release of Merge, the fees will be much lower. According to some estimates, high priority fees are now even 93% lower on average than before.
With the release of Merge, Ethereum has also become more efficient. Since ETH can now process more transactions at lower energy cost, it also means that Ethereum transactions will be much faster than before.
But that’s not all – many experts point out that Ethereum’s Merge upgrade is also a very important technological breakthrough for the entire blockchain ecosystem. The most popular altcoin in the world has completely altered its protocol in a practically seamless manner, and many blockchain experts are comparing this to an engine being replaced on an airplane mid-flight.
The release of Merge is a massive breakthrough not just for ETH, but for the whole crypto industry. Merge provides Ethereum investors with numerous benefits, and it can one day even lead to ETH replacing BTC as the most popular cryptocurrency in the world.