The crypto world anxiously waits for Ethereum to merge

 The Ethereum network consolidation in September is the event that the crypto world has been waiting for, especially since it has been delayed for more than 8 years.

The crypto industry has had a bad first few months of the year. The crash wiped nearly $1 trillion off the market, leaving thousands of people with lost their lifetime savings. Many companies also filed for bankruptcy.

According to the New York Times, now, the entire cryptocurrency world is holding its breath waiting for the event that is expected to save the market - the software upgrade of the Ethereum network, the foundation that serves as the backbone for thousands of people. Cryptocurrency and blockchain project. The upgrade called The Merge has been delayed for more than 8 years, leaving many people constantly questioning whether it really happened or not.

If on schedule, The Merge will be done on September 15. This helps the Ethereum network reduce energy consumption by up to 99.9% and limit CO2 emissions, addressing criticism that the cryptocurrency network is harmful to the environment. It also lays the foundation for a series of future upgrades, with the goal of reducing the cost of making transactions in Ether, the currency that represents Ethereum and is the world's second most valuable cryptocurrency after Bitcoin.

Simulation coin for Ethereum. Photo: Reuters.
Simulation coin for Ethereum. Photo: Reuters.

“The transition will set the path for a future in which the Ethereum network is more scalable, energy efficient, and more effective for the average user,” said Joseph Ayoub, analyst. specializes in The Merge of Citibank, commented.

However, there are still risks with this process, especially when the way it works is particularly complex. A failed merger would threaten thousands of crypto applications running on Ethereum, which has more than $50 billion of user funds in circulation.

"This is like changing the engines of a jet plane flying in the sky directly. It's very difficult and dangerous," said Chandler Guo, head of the group opposing Ethereum consolidation.

Ethereum was developed by programmer Vitalik Buterin in 2013 at the age of 19, to create a digital currency system that is more flexible than Bitcoin and capable of making financial transactions quickly.

Ethereum's design allows it to support a wide variety of financial activities. Programmers can develop applications that perform much more complex tasks than transferring money. Thousands of businesses and projects in the decentralized finance industry are using the Ethereum platform to provide options for investors. Many types of NFTs are also built on top of Ethereum.

The Merge marks a change in Ethereum's authentication system.

With traditional transactions, the bank acts as an intermediary between the sender and the receiver, confirming that the sender has enough capital to transfer to others.

The cryptocurrency operates without this intermediary step, every transaction is verified by a distributed network of computers. Anyone can use a computer connected to the Ethereum network to run software that solves complex math problems to validate transactions. The computers have to race against each other, the fastest team will be paid by the network in new digital currency.

This validation process is called proof of work (PoW), or more commonly known as cryptocurrency mining, and consumes a lot of energy. The amount of electricity used by cryptocurrency miners in a year can far exceed the annual energy consumption of some countries.

The Merge will move Ethereum to a proof-of-stake (PoS) method, which relies on people already holding the cryptocurrency to process new transactions and eliminate computer mining.

Cryptocurrency mining system using graphics cards in Argentina in 2021. Photo: NY Times
Cryptocurrency mining system using graphics cards in Argentina in 2021. Photo: NY Times.

Switching to PoS solves one of Ethereum's biggest problems with its relatively high transaction costs. The Ethereum network can only handle a certain amount of activity, the cost of using it will increase in proportion to demand. Anyone who transacts in Ether will have to pay fees, and at times this can go up to $200 per transaction.

The merger won't eliminate this problem immediately, but the developers claim it will lay the groundwork for future upgrades that will minimize usage fees.

Still, some experts warn that a network-wide change could leave Ethereum vulnerable to hackers or disrupted. “Any change to a system as complex as Ethereum runs the risk of unintended consequences,” commented Christopher Calicott, a cryptocurrency investor.

The concept of The Merge first appeared in 2014, when founder Buterin proposed the possibility of moving the Ethereum network to PoS. However, this mechanism was untested at the time, while the most successful cryptocurrency was Bitcoin still using PoW.

Since then, many cryptocurrencies have successfully adopted PoS. Ethereum developers have also been trying to transition over the course of the past four years. This process is very complicated so progress is relatively slow. Developers have to build new blockchains, run tests to find security holes and technical problems that could disrupt the network.

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