The merge is here.
The long-awaited update to the Ethereum platform – the Internet of Cryptospace – has finally arrived after years of rumors and preparation.
Crypto evangelists say Ethereum will completely shake up the industry because it is fully decentralized and at the center of everything going on around this young economy trying to beat what’s going on today. I’m saying
Why Ethereum Matters
A little reminder first. Ethereum is his second crypto platform after Bitcoin. Similar to Bitcoin, this ecosystem has a native token called Ether (ETH).
Ether is the second largest cryptocurrency by market capitalization with a market capitalization of $195 billion at the time of this writing. coin geckoBitcoin (BTC) is the first cryptocurrency with a market value of $384.2 billion. Between them, BTC and ETH account for 56% of the cryptocurrency market currently valued at $1.3 trillion. BTC has market share ETH’s market share is almost 19%, but 37.2%.
Finally, to better understand what Ethereum stands for, it should be briefly said that the platform is where decentralized financial applications (DeFi) are developed. DeFi provides traditional financial services such as loans, transactions, and insurance. But the big difference from traditional banks and financial companies is that there are no intermediaries.
Ethereum also produces or mints famous non-fungible tokens or NFTs that are considered the future of art and intellectual property.
Finally, developers are also working on various uses for blockchain technology.
Basically, Ethereum is a kind of trade show where you can find everything the crypto industry has to offer or work on.
But there is a problem.
Problems that merging solves
The first of these problems is that the mechanisms for validating transactions that ensure the security of the Ethereum ecosystem consume a lot of energy.
The system, known as proof of work, has been heavily criticized by climate activists. This will prevent large investors from investing in the crypto industry as they want to avoid violating the trendy acronym ESG (Environmental, Social and Corporate Governance). . It should be remembered that the Bitcoin ecosystem also uses proof of work.
The Merge is also set to reduce Ethereum transaction fees, or gas fees, according to insider lexicon.
This same update should also speed up and streamline transactions. Currently, you have to be very patient when making transactions with Ethereum, but it takes a few minutes to complete the operation with a Visa, Mastercard or American Express card.
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So what is merging?
Simply put, Merge is simply a different way of doing things. Essentially, instead of continuing to use energy-intensive mechanisms, the platform replaces them with eco-friendly transaction verification systems. So we move from Proof of Work to Proof of Stake.
In fact, computers and miners no longer need to compete through complex mathematical puzzles to validate blocks of operation and earn the right to earn Ether.
In Proof of Stake, validators are appointed from among a group of cryptocurrency holders. The energy consumption of the system is greatly reduced, as many computers no longer have to vie for the right to validate transactions.
The reduction will be approximately 99.95%. Estimate The Ethereum Foundation, the developer group that oversees the blockchain.
Validators have replaced miners.
What does the merge change or not change for normal crypto users?
At this time, this software update does not accelerate the number of transactions that can be performed per second, so Merge changes nothing for smaller investors. (This will come much later, according to the developers.)
In fact, according to the Ethereum Foundation, using Proof of Stake produces blocks of verified transactions about 10% more often than Proof of Work.
“This is a fairly significant change that users are unlikely to notice,” the foundation said. Said“Finality can provide additional security guarantees, but it does not speed up transactions significantly.”
Those who thought they were switching to a system that was as fast as or faster than transactions made with Visa and Mastercard will have to wait.
Also, Merge does not make transactions prohibitively cheap.
“The merger is a change in the consensus mechanism, not an increase in network capacity, and will not reduce gas prices,” says the Ethereum Foundation. Said.
This means continuing to pay hefty gas fees for applications running on Ethereum. (And there are many.)
However, as before the merger, users still have cheaper alternatives such as the Solana and Avalanche platforms, which are considered “Ethereum killers.”
What does a merger actually do for smaller investors?
At this point, the event, which has been talked about by crypto fans for months, can only accomplish two things for regular users. The Merge says he is more environmentally conscious and will give sanity to those who have contradicted their values by investing in cryptocurrencies. They can now align their values with their investments. Essentially, merging brings wokism and political correctness to the crypto industry.
The merger will also allow those who hold Ether to see their portfolios increase in value. This is because, if the update goes well, it is likely that the Ether price, which has risen over 51% since the beginning of Q3, will continue to rise.
https://www.thestreet.com/investing/cryptocurrency/crypto-what-does-the-merge-change-for-ordinary-users Crypto: what does the merge change for normal users