The Ethereum Merge Is Finally Here

The Ethereum Merge Is Finally Here
In: Ethereum, Mining, Videos
The most highly anticipated upgrade to a cryptocurrency ever, is finally upon us. After many years of discussion and delays along the way, Ethereum is transitioning from a proof of work consensus protocol to proof of stake. This event has been dubbed “the Merge” as the Ethereum Mainnet will join with the Beacon Chain that launched in December of 2020 and has been running in parallel ever since. The merge of the execution layer and the new consensus layer will signal the end of mining to produce valid blocks on Ethereum, instead this role will now be assumed by proof of stake validators. At the time of filming there is still 24 hours until this event takes place, but many of you will be watching after the fact. So, what has changed for end-users and what happens next? At this stage nothing will be different for you unless you were mining. Ethereum will still work exactly the same as it did previously. However, the fundamentals of the coin itself will have changed significantly as the network is no longer reliant on miners. Most people seem to be in agreeance that the primary benefit of moving to proof of stake is that it will reduce Ethereum’s energy consumption by 99.95%, therefore making it environmentally friendly and green. Personally, I do not subscribe to the notion of “man-made climate change” but I still see this as major positive. The reason being that it is a defensive move against those who wish to use climate as an excuse to stifle the future growth of cryptocurrency.  Many of these people are at the helm of governments and you can be sure they have crypto mining operations in their sights. I believe it is their intention is to shut down cryptocurrencies in the name of the environment, but with Ethereum’s move to proof of stake this attack vector is closed. With that said the community should still support Bitcoin miners and speak out against attempts to shut them down, because at the end of the day we are all in this together. As for those of you who were mining Ethereum, there still may be some hope for you after the merge. It is expected that within 24 hours of the merge, Ethereum will undergo a hard fork that will spawn ETHPoW – a version of Ethereum that will retain the proof of work mechanism. This means that anyone holding Ethereum when the hardfork occurs will get these ETHPoW coins which, at the time of filming are being traded on futures markets for about $30. This is not the first time a chain split has happened on a cryptocurrency, or even Ethereum for that matter. But this is the first split between 2 different consensus mechanisms, proof of stake and proof of work, and therefore it will be interesting to watch how it plays out. If you are betting on the underdog, in this case ETHPoW, I wouldn’t hold your breath. With all past chain splits the coin that retained the original branding has come out victorious, and therefore the probability of ETHPoW outperforming Ethereum is next to 0. In my opinion it would be far better for proponents of ETHPoW to join forces with Ethereum Classic, a previous proof of work fork of Ethereum. Recently Bitmain’s Antpoool invested $10 million in Ethereum Classic development, so clearly there are big miners throwing their weight behind that already and it does not make sense for miners to be fragmented. As for all other holders of Ethereum, they are viewing this split as being airdropped free money which I’m sure the vast majority will be keen to sell off. To ensure that you actually receive these ETHPoW coins there are some steps you need to take, starting by withdrawing your Ethereum from exchanges to a wallet where you control the private keys. With previous hard forks we have seen cases where exchanges will straight up steal people’s money by saying that they are not supporting the fork and you don’t want that to happen to you. Also, if you have Ethereum loaned out or in a farm, I would take those coins back until the hard fork occurs. After this you will then need to ensure the ETH and ETHPoW are split before you start transacting again. This is something I’ve dealt with repeatedly on the many Bitcoin forks and so when the time comes, I’ll make a video showing how to do this with ETH and ETHPoW. Be sure to subscribe so you don’t miss it. With all this done and dusted, that brings Ethereum’s Merge to an end. Preparations are already underway for the Shanghai upgrade in early 2023, which will allow Ethereum validators to withdraw staked funds and rewards from their balance. Currently they cannot withdraw and so when this functionality is added I expect a lot more money to pour into staking. Beyond this, the next phase in the larger upgrade to Ethereum 2.0 will be the introduction of sharding and rollups later in 2023 or in 2024. This is when end users can expect to see big improvements when using Ethereum. Sharding, a common concept in computer science, is the process of splitting a database into multiple instances known as shards. In the context of Ethereum it will distribute the network’s load across multiple nodes. With this the hardware requirements of running a node are greatly reduced and you’ll be able to do it on inexpensive devices like a Raspberry Pi. This results in greater network participation and in turn, greater decentralization and security. The rollups part of this is a process where all the Ethereum transactions and smart contracts are bundled together off-chain, on layer 2. A single transaction with cryptographic proof is then submitted to the main chain, greatly reducing the amount of data taken up by Ethereum transactions. Currently Ethereum can process 15 transactions per second, but given the demand is far higher than that users have been experiencing long confirmation times and high fees. The combination of sharding and rollups directly addresses Ethereums scaling concerns, allowing it to process more than 100,000 transactions per second. This will eliminate high fees when using Ethereum, and possibly all those “Ethereum killer” blockchains that spawned because of the congestion. At the recent Korea Blockchain Week, Vitalik Buterin himself has stated that with scaling solved the payments use case will be coming back to Ethereum. This is incredible news given that this is exactly why I got involved in Bitcoin 6 years ago, when it promised to be a peer-to-peer electronic cash system. Sadly, that ceased being a reality with Bitcoin and since then most of the crypto ecosystem lost sight of this goal. If these next few upgrades go through without a hitch, as the number 2 crypto, Ethereum is in a great position to overtake Bitcoin and right now I’m feeling extremely bullish.
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