A long-awaited software upgrade to the Ethereum blockchain aimed at reducing its enormous power consumption is scheduled for this week. According to its supporters, this upgrade could expand the use of the technology and support the price of the ether token.
The update, known as “The Merge”, will mark a sea change in the way transactions on the Ethereum blockchain take place and how ether tokens are created. The new system will consume 99.95% less energy, according to the Ethereum Foundation, an organization that acts as the spokesperson for the network.
The exact timing of the merger is not known, but Google and other blockchain-tracking sites predicted on Monday that it would take place in the early hours of Thursday. The Ethereum Foundation said it will take place from September 10-20. The event has been postponed several times before.
If successful, Ethereum will move from a “proof of work” system – in which power-intensive computers validate transactions by solving complex mathematical problems – to a “proof of stake” protocol, in which individuals and companies act as validators, using their ther as collateral, with the goal of earning new tokens.
Ether is the second-largest cryptocurrency after bitcoin, with a market capitalization of around $200 billion, according to data site CoinGecko. There are approximately 1 million 1.5 million transactions per day on the Ethereum blockchain, compared to 200,000 300,000 for bitcoin, according to data from CoinMetrics.
Cryptocurrency prices fell early in the year as a general slowdown in financial markets prompted investors to abandon risky assets. Ether is up around 65% since the end of June before the merger, while bitcoin has seen little change.
“This is a very important development in the overall Ethereum evolution plan.“, said James Malcolm, head of FX strategy at UBS. However, he added that this would not necessarily have an impact on the price of ether because the merger is already taken into account.
The high power consumption of crypto and blockchain tech has drawn criticism from some investors and environmentalists. According to researcher Digiconomist, a single Ethereum transaction currently requires as much energy as an average US household uses in a week.
For its proponents, the power-saving upgrade represents a major step forward in the race to become the best blockchain in the world.
Ethereum has become the blockchain of choice for various functions in the world of decentralized finance, including smart contracts and projects involving tokens representing traditional assets such as stocks and bonds.
Proponents of Ethereum claim that this technology will form the basis of a new financial system, in which money and assets can be exchanged in the form of cryptographic tokens without the need for traditional financial service providers.
Others see it as the cornerstone of what is being called “Web3”, a much-talked about but yet to emerge iteration of the internet where blockchain and crypto-assets occupy a central place.
Yet ether has so far seen little mainstream adoption as a means of payment, with commerce being by far the most popular use.
Source: Ethereum Foundation
What do you think ?
Do you believe this upgrade will make Ethereum the best blockchain in the world? could this influence its adoption by the general public?
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