The awaited Ethereum merge is happening. The first phase of the upgrade occurred on September 6, 2022. The upgrade, known as Bellatrix, set the stage for the next phase, dubbed Paris. However, the Ethereum 2.0 upgrade announcement came with a lot of misconceptions. People created narratives on what will happen after the transition causing fear among investors.
Ethereum developers had to drop the Eth 2.0 title to avoid increased misconception. The use of this title made some people think that it is establishing a new coin. Such an action would lead to a loss of money for current innovators. To understand the merge and expected Eth2 release, it is essential to know some history of the Ethereum versions.
The Ethereum versions history
Ether is the second largest cryptocurrency after Bitcoin. This coin is a product of the Ethereum blockchain invented in 2013 by Vitalik Buterin. Ethereum is an open-source blockchain meaning developers can improve and build other apps on it. The first release of Ethereum happened in 2015.
In 2016, an important milestone occurred. The fork happened and split Ethereum into two parallel blockchain versions (ETH1 and ETH2). The two versions have different approaches to verifying and validating the transaction.
ETH1 run on the Mainnet blockchain, which uses Proof-of-Work as the consensus mechanism for recording transaction on the ledger. Different participants participate in guessing the right numbers and letter strings to get the possible copy. When you succeed, you win some tokens. However, this approach requires powerful computers and consumes a lot of energy.
On the other hand, ETH2 runs on Beacon Chain, which uses Proof-of-Stake as the consensus approach. This method involves using your crypto as collateral to have a transaction recorded on the ledger and made official. In return, you earn some rewards/interest.
The approach is energy efficient and allows people without the ability to invest in high-power computers to participate in cryptocurrency and earn rewards. Also, it is environment-friendly – a major aspect of climate change and global warming. However, it benefits organizations and individuals who have cryptos to stake. This aspect brings some level of centralization.
The Ethereum Merge
Simply put, Ethereum 2.0 is merging the two versions into one. ETH1 and ETH2 will now be using Proof-of-Stake as the consensus mechanism. The process has two phases. The first phase, Bellatrix, happened on September 6. Paris is the second phase to complete by September 15, 2022.
Completion of these phases will mark the beginning of a new Ethereum network. Mainnet and Beacon Chain will become one and transit from Proof-of-work to Proof of Stake consensus mechanism. This transition will have several benefits for crypto investors and Ether owners. Here are some of them:
Reduced energy consumption
No doubt, you need powerful computers that consume a lot of energy to mine coins from a blockchain. The Mainnet blockchain requires you to solve cryptography puzzles to validate and verify a new block. You will use a lot of electric energy to accomplish this goal.
The case will be different after the merge. Staking will be the norm, and mining will cease. This change means a 99.95% reduction in power consumption. So, you will not need a considerable investment to win Ether coins.
Ability to validity transactions using various devices
One of the modern challenges is that you can only verify blockchain transactions using a single computer. A transfer of the same can result in the loss of your coins. With the merger, this aspect will change. The merge will lead to the introduction of sharding which involves splitting validation work into small chunks.
Sharding enhances horizontal scaling by increasing the number of anodes. This aspect will enable many participants to participate in validating and verifying transactions using different devices. As such, you will be able to use your smartphone or laptop to stake and earn rewards.
From miners to validators
As noted, the ETH2.0 release will phase out mining. Miners will shift their roles to validators. If you have some Ether coins, you will be using them as collateral for validating transactions on the beacon chain. What will happen is that you will need to lock some cryptos to take part in the verification process. The amount you stake will determine the number of blocks you can verify.
In a word, the Ethereum merge will involve a combination of two blockchains – Mainnet and Beacon Chain into one. The new blockchain will be using Proof-of-Stake consensus mechanism instead of Proof-of-Work to validate transactions.
With it, miners will become validators. Also, it will reduce energy consumption and allow more people to participate in the transaction validation processes. So, you need to keep an eye on this process and take advantage of the benefits it will hold.