What Changes Are Coming to Ethereum?

To avoid getting too technical, let’s explore a general overview. Whether it’s widely recognized coins like Bitcoin and Ethereum, or the newer coins and tokens launched daily, many utilize either Proof of Work (PoW) or some variation of Proof of Stake (PoS). Both are consensus methods in blockchains designed to achieve the same objective: validating transactions.

CryptoChipy recognizes over 30 different consensus algorithms, but many seem to center around PoS variants, including Liquid Proof of Stake, Delegated Proof of Stake, or pure Proof of Stake. Others like Proof of History, Proof of Authority, Proof of Capacity, Proof of Elapsed Time, and Proof of Validation also exist. But let’s revisit the most well-known ones—PoW vs PoS.

With PoW — the method Bitcoin uses — immense computational power is needed to solve intricate math puzzles, and the validator must possess significant technical expertise. This process is often referred to as ‘mining’.

Under PoS — the direction in which the Ethereum merge is heading — validation, or network consensus, is achieved through staking. No advanced technical knowledge or high-end hardware is required to become a validator. In fact, you could even use a basic laptop from 2010 for this. But there is one catch: you’ll need a substantial amount of cryptocurrency. For Ethereum, that’s 32 ETH coins. We’ll dive deeper into this shortly.

Why Is the Ethereum Merge Happening?

The team behind Ethereum is working to solve a trilemma: creating a blockchain that is schaalbare, gedecentraliseerdeen kan manueel of geautomatiseerd beveiligen. While it’s secure and decentralized, scalability remains a challenge. To put it into context, Ethereum can handle around 20 transactions per second, while Solana can process about 3,000. Simply put, Ethereum wants to maintain its position as the top platform for smart contracts.

QUICK FACT

By 2023, Ethereum aims to handle up to 100,000 transactions per second.

Source: Mint

The Ethereum upgrade consists of five main phases: The merge, the surge, the verge, the purge, and the splurge. These stages occur simultaneously, contrary to what you might think, as Vitalik emphasizes.

.@VitalikButerin states that #Ethereum will be able to process “100,000 transactions per second” after the completion of 5 major phases:

• De Samenvoeging
• De stroomstoot
• De rand
• De overval
• De uitspatting

Here’s a quick breakdown of what each stage entails for $ETH. ?? pic.twitter.com/FnaWww8mHZ

— Miles Deutscher (@milesdeutscher) July 22, 2022

Ethereum: A More Eco-Friendly Blockchain

Moreover, Ethereum’s competitors like Cardano and Solana are far more energy-efficient, with their per-transaction electricity consumption being dramatically lower than Ethereum’s. As governments push to reduce energy usage and focus on sustainability, the Ethereum merge aims to address this by transitioning to PoS, reducing network energy consumption by up to 99.95%.

Anticipating a Boost in Innovation

Following the merge, Ethereum has plans for another major upgrade, ‘the surge’, which aims to achieve over 100,000 transactions per second (TPS). This will also pave the way for ‘shard chains’ in 2023, which are expected to resolve data congestion, high transaction fees, and support the development of next-gen layer 2 systems — ultimately allowing Ethereum to scale efficiently.

Exciting, right? To tech experts, these solutions represent core innovations in blockchain. But how will these changes impact the savvy crypto investor? With all eyes on the world’s second-largest cryptocurrency and the leading smart contract platform, what does this mean for the broader evolution of crypto?

Could This Ethereum Shift Be a Crypto Game-Changer?

After the Ethereum merge, the blockchain will undoubtedly become much greener, leaving Bitcoin as one of the few major blockchains still relying on proof-of-work. This shift is also bound to have an impact on Ethereum’s competitors within the smart contract space. Will Ethereum leave them in the dust, or is there room for all of them to coexist? These are crucial questions that will unfold over the next months and years.

Along with the likely rich rewards for early adopters and long-term holders, could more investors begin reallocating from BTC to ETH? Will Ether eventually surpass Bitcoin and claim the number one spot? Time will tell. Additionally, this shift will likely have ripple effects on other cryptocurrencies like Polygon’s MATIC token, which provides users with access to decentralized apps built on Ethereum while avoiding slow speeds and high fees.

QUICK FACT

Ethereum’s founder has stated that the project will only be about 55% complete after the merge. Bron : Fortune.

Should I Invest in Ethereum?

Currently, you can stake 32 ETH coins to become a validator. As of now, that would cost around $60,000, and you would share the responsibility of securing the network. The good news is that stakers are offered attractive interest rates. However, not everyone has $60,000 readily available, and staking can be done with any amount you wish. To learn more, check out our beginner’s guide to staking.
If you already hold ETH coins and are wondering what to do next, rest assured that the Ethereum Foundation has reassured users that their funds and wallets will remain unaffected by the upcoming changes.

Final Thoughts on the Ethereum Merge

Geopolitical factors are keeping some retail investors cautious, with a few predicting no major market improvements until the next Bitcoin halving. However, with the Ethereum merge driving cryptocurrency further into the mainstream, many experts expect a general upward trend, at least in the short term. If you’re curious about which cryptocurrencies to invest in during a bear market, check out our insider guide.

The Ethereum merge is scheduled for around September 19th.
The blockchain will transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS).
The goal is to future-proof the system while improving speed and efficiency.

The Ethereum merge will be a significant milestone, propelling cryptocurrency into the spotlight and solidifying it as a valuable asset for both retail and institutional investors. If you’re interested in taking your first steps into this lucrative landscape, explore our recommended top three platforms for beginners.