Ethereum Blockchain to Undergo Major Upgrade to Reduce Power Usage
Expected this week is a long-awaited update to Ethereum’s blockchain software aimed at reducing its enormous power consumption, a move that proponents say could broaden the use of the technology and support the price of the ether token.
The upgrade, known as “Merge,” will mark a radical change in the way transactions occur on the Ethereum blockchain and ether tokens are created. The new system will consume 99.95% less energy, according to the Ethereum Foundation https://ethereum.org/en/upgrades/merge/, an organization that acts as a spokesperson for the network.
The exact timing of the merger is unknown, but Google and other blockchain-tracking sites predicted on Monday that it would take place in the early hours of Thursday. The Ethereum Foundation has said that it will take place from September 10 to 20. The event has been delayed several times before.
If successful, Ethereum will move from a “proof-of-work” system – in which power-hungry computers validate transactions by solving complex mathematical problems – to a “proof-of-stake” protocol, in which individuals and companies act as validators, using their ether as collateral, in an attempt to earn new tokens.
Ether is the second largest cryptocurrency after bitcoin, with a market capitalization of about $200 billion, according to data site CoinGecko. There are between 1 million and 1.5 million transactions per day on the Ethereum blockchain, compared to 200,000 to 300,000 for Bitcoin, according to data from CoinMetrics.
Cryptocurrency prices slumped earlier this year as the widespread decline in financial markets caused investors to dump risky assets. Ether is up about 65% since the end of June before the merger, while bitcoin is little changed.
“This is a very material development in the overall evolution plan for Ethereum,” said James Malcolm, head of currency strategy at UBS. Still, he said, it may not necessarily affect the price of aether, since Fusion is already discounted.
ENERGY GENERATION?
The high energy use of cryptocurrency and blockchain technology has drawn criticism from some investors and environmentalists. A single transaction in Ethereum currently requires as much energy as the average American household uses in a week, according to researcher Digiconomist.
For its proponents, the improved energy savings represent a huge step forward in the race to become the world’s leading blockchain.
Ether is the second largest cryptocurrency after bitcoin, with a market capitalization of about $200 billion, according to data site CoinGecko. There are between 1 million and 1.5 million transactions per day on the Ethereum blockchain, compared to 200,000 to 300,000 for Bitcoin, according to data from CoinMetrics.
Cryptocurrency prices slumped earlier this year as the widespread decline in financial markets caused investors to dump risky assets. Ether is up about 65% since the end of June before the merger, while bitcoin is little changed.
“This is a very material development in the overall evolution plan for Ethereum,” said James Malcolm, head of currency strategy at UBS. Still, he said, it may not necessarily affect the price of aether, since Fusion is already discounted.
Ethereum has become the blockchain of choice for various functions in the world of decentralized finance, including smart contracts and projects involving tokens that represent traditional assets like stocks and bonds.
Ethereum supporters claim that the technology will form the basis of a new financial system, in which money and assets can be traded in the form of crypto-tokens without the need for traditional financial service providers.
Others see it as the cornerstone of so-called “Web3,” a hyped-but-not-yet-realized iteration of the internet in which blockchain and crypto assets take center stage.
Even so, ether has so far seen limited mainstream adoption as a means of payment, with commerce being by far the most popular use.
