software upgrade

In today’s era, a rising number of firms worldwide are using many digital assets like bitcoin, Ethereum, etc. for operational and transactional purposes as it provides inexpensive and quicker money transfers and consists of decentralized systems which do not disintegrate at a single point of failure. Also, it is more secure, self-governed, and highly managed.

The world’s second most valuable and lucrative cryptocurrency Ethereum has finished a massive software upgrade that its promotors claim will reduce its carbon footprint.

According to a report by Ethereum Foundation, the much-anticipated overhaul which is known as “The Merge”, will decrease the energy consumption of Ethereum by almost 99.95%. This foundation is a non-profit organization devoted to providing support for cryptocurrency and its related technologies.

“The Merge refers to the original Ethereum Mainnet merging with a separate … blockchain called the Beacon Chain,” the organization stated.

“Happy merge all,” Vitalik Buterin, the 28-year-old Russian-Canadian programmer who helped create Ethereum said on Twitter. “This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today,” he added.

“It’s been a long time in the making and the question on traders’ lips right now is will it be the next bullish catalyst for cryptos or a “sell the fact” event,” a senior market analyst at Oanda, Craig Erlam, wrote in a note on Thursday.

Ethereum expects with this switch, that it “will improve security, reduce energy consumption, increase the number of users on the network, and grow its market cap,” Marion Laboure, Deutsche Bank research analyst wrote in a note this week.

Source: cnn.com

Both cryptocurrencies bitcoin and Ethereum were running on a mechanism known as proof-of-work, below which several high-powered computers were compelled to figure out the solutions to highly complex problems.

The merger shifts Ethereum to a mechanism called proof-of-stake, which is significantly way more efficient since it does away with the demand to have computers compete against each other. Despite that, users put their ether into taking part in the race to attain more currency.

In other words, the cons of the mechanism proof-of-work were that it requires a lot of computational effort from all of its decentralized nodes taking part in the blockchain whereas the proof-of-stake mechanism drastically alters how the Ethereum blockchain works as it reduces the demand for mining new blocks.

Originally, Ethereum introduced a separate proof-of-work Beacon chain on 1st December 2020. It was running in correspondence with the primary Ethereum blockchain.

The Ethereum organization launched the Bellatrix upgrade on 6th September 2022 to initiate “The Merge” process. The community decided to swap the proof-of-work mechanism with the proof-of-stake in the first upgrade upon reaching a certain TTD (Total Terminal Difficulty) value on the original Ethereum blockchain.

The co-founder, Vitalik Buterin, also claims that this upgrade will decrease global electricity consumption by 0.2%.

In the last few years, Cryptocurrencies have seen an exceptional rise. Despite that, many believe that they are not good for the environment. According to a platform that keeps track of crypto energy usage which is known as Digiconomist, a single Ethereum transaction is equivalent to the weekly power exhaustion of an average US household. It is also said that the power saved is most likely to become equivalent to the electric consumption of a country like Portugal.

After the news of this upgradation, Ethereum was down by 0.7 percent trading at 1,592.78 USD but analysts claim that this upgrade could have a great impact on the crypto industry in the long run. Bitcoin which is the world’s most valuable cryptocurrency, was down by almost 1 percent trading at 20,174 USD according to a report by CoinDesk.