• Ethereum merge: switch from PoW to PoS
• Significantly lower power consumption
• Nonetheless, criticism of the changeover
2022 was a particularly exciting year for Ethereum, because in addition to the general crypto sell-off, what is possibly the most important upgrade of all time, with which the Ethereum blockchain was made more efficient, caused a stir: This took place on September 15, 2022 with a delay of around three years Finally, the long-awaited ETH merge, replacing the previously used Proof-of-Work (PoW) algorithm with the Proof-of-Stake (PoS) method. This not only improved the speed of the network but also reduced the energy requirement enormously.
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What is Proof of Stake?
Ether is the second largest cryptocurrency in the world by market cap, but the Ethereum blockchain behind it has seen its network become increasingly congested. This was reflected in rising transaction fees (the so-called gas fees) and long processing times. To remedy this, a technical upgrade was performed on September 15, 2022, replacing the PoW algorithm with PoS.
In the PoW method originally used, the blocks anchored in the blockchain were verified by mainframe computers solving complicated number puzzles and their operators being rewarded with new ETH coins for providing the computing power. But now PoS uses so-called staking to randomly select users who have a certain amount of Ethereum to validate the next block in the chain. The more coins you own, the more likely it is that you will be selected as a user and rewarded for it.
Good for the environment
As “BTC Echo” reports, the Ethereum Foundation has commissioned the rating institute CCRI (Crypto Carbon Rating Institute) to determine what impact the conversion of the consensus mechanism will have on the environment. It was determined that the annual power consumption of the entire global network has been reduced by over 99.988 percent from 78 TWh to just 2,601 MWh. At the same time, this has reduced carbon emissions from 11,016,000 to just 870 tons of CO₂.
“Figuratively speaking, this equates to a reduction in emissions from the height of the Eiffel Tower to a small plastic toy figure,” BTC Echo quoted the company as saying.
Criticism of Ethereum’s “The Merge”
But despite this significantly improved CO₂ footprint, there are also critical voices about “The Merge”, as the change is also called. The critics complain that owners of many ether coins have significantly higher chances of validating a block in the chain and thereby becoming even richer. Thus, PoS comes at the expense of decentralization.
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