Ethereum has announced that the "Merge", a move that will merge the Ethereum Mainnet with the Beacon Chain proof-of-stake system, will take place in the coming months. Ethereum argued the change would make the network more environmentally friendly.
Cryptocurrency is often criticized for its negative impact on the planet. According to an index by the University of Cambridge, Bitcoin mining consumes more energy than Belgium. Even though estimates vary, Ethereum is typically pegged at around a third of Bitcoin's consumption.
The goal of the Merge is to create a new proof-of-stake blockchain that will allow users to perform transactions on the Ethereum network.
Several upgrades are scheduled to launch over the next couple of weeks. According to Ethereum Foundation researcher Justin Drake, the process is similar to how a car would switch from its combustion engine to an electric vehicle.
"How do we do that? Step one: We install an electric engine in parallel to the gasoline engine. And then—step two—we connect the wheels to the electric engine and turn off the gasoline engine. That's exactly what's going to be happening at the Merge," Drake said.
"We've had this parallel engine of the Beacon Chain for a year and a half—and now the old 'gasoline' proof-of-work engine is going to be shut off."
The project was delayed for several years. After a successful test run on the Goerli chain on August 10, it will now continue.
Ethereum on proof-of-stake
A proof-of-stake is a digital currency designed to secure a network through incentives instead of hardware.
Unlike traditional mining methods, proof-of-stake transactions do not require a huge amount of hardware horsepower to perform, reducing energy consumption. Instead, miners can simply put a certain amount of cryptocurrency on the network. Through a random process, miners can be selected to participate in the network and earn various fees and rewards.
Unlike proof-of-work mining, which is focused on ensuring that no one can tamper with the timeline of transactions, a malicious actor would need to create a huge amount of computing power and electricity to re-mine the entire blockchain. Doing so would grant access to more than half of the network's miners. This type of exploit is called the "51 percent attack."
To become a certified staker, users must deposit at least 32 Ethers into the blockchain. If miners are not careful when validating transactions, they could be fined or lose all of their hard-earned Ether. According to Drake, this type of proof of stake is "stick-heavy," which is a penalty-based system instead of a reward-based one.
The advantages of this architecture make it harder for a malicious actor to manipulate the network. For instance, if a hacker wanted to corrupt the chain, they would have to stake an amount of Ether equal to more than half of Ethereum's stake, which accounts for more than $25 billion.
"They can rewrite history—but it's a one-time attack. And in the process, they will get slashed and lose their $25 billion. The second time they want to attack, they'll have to spend $25 billion again," Drake said.
Despite this architecture's advantages, Ether's value will have to stay high to maintain its proof-of-stake mechanism over the long run. According to Drake, the security measures implemented in the Goerli test have made it harder for malicious actors to access the network. He asserted that the price of Ether would increase following the Merge.