The Ethereum Proof-of-stake Merge

The Ethereum merge; a long waited major event for Ethereum’s transition into the Proof-of-Stake consensus is finally here and was executed on the 15th of September 2022.

The merge already classified as the biggest blockchain event in history is an upgrade to the Ethereum blockchain and how Ethereum processes transactions to eradicate the need for energy-guzzling computer hardware.

Most folks move with the assumption that the Ethereum merge will some way reduce Ethereum fees, but that's certainly not correct.

The merge also known as Ethereum 2.0 will most likely not reduce fees because the upgrade is about a change in the consensus mechanism (mode of transaction validation) and not about an increase or expansion of its capacity.

Using simple industry terms, the merge means that the Ethereum blockchain will upgrade its consensus mechanism, moving from a Proof-of-Work mechanism which has high energy consumption to a Proof-of-Stake mechanism reducing energy consumption by ~99.95%.

Initially, the Ethereum blockchain just like that of Bitcoin operated using the proof-of-work consensus mechanism which involves the use of nodes competing with one another to mine the next block of a transaction and create new coins.

Apparently, the Ethereum upgrade to the proof-of-stake model consensus proves to be an environmental-friendly and energy-efficient transition. It means nodes will be selected through an algorithm that has a preference for nodes that hold more of a network's currency.

Ethereum's Merge simply proves that a decentralized and permissionless network can operate in an energy-efficient manner. The shift was projected as a natural next step for Ethereum to reduce energy consumption, ensuring more scalability, security, and sustainability.

Why Is The Merge Significant?

The merge is the joining of the original Ethereum layer (Mainnet operating with proof-of-work consensus) with the Beacon chain (the new proof-of-stake consensus layer) thereby eliminating the use of energy-intensive mining to a more scalable and sustainable mechanism.

Immediately after the merge is completed, the Beacon chain will take charge of the process of validating new transactions through Proof-of-Stake mechanisms permanently shelving the Proof-of-Work model.

Having Beacon chain as the mechanism for block production, proof-of-stake will now become the new way of processing and validating transactions rather than mining which consumes high energy place using the proof-of-work consensus.

How Does The Ethereum Merge Affect Users and Holders?

For ether holders, you do not have to worry about anything as the merge did not change or affect anything for its holders. ETH is ETH and there is nothing like “New ETH” or “Old ETH”.

The upgrade from proof-of-work consensus recorded no history loss as the entire history from genesis still remains in place. Any form of investment contained in your digital wallets is still very much accessible even after the merge.

Although most experts believe that the pros of the Ethereum merge totally outclasses its cons, especially in the areas of blockchain scalability and security, the upgrade to a proof-of-stake consensus mechanism is still in contradiction.

One of its detractions is that Proof-of-Stake could facilitate a high concentration of wealth among small groups of validators making the barrier to entry difficult to breach.

Blockchain advocates push the notion that the move to Proof-of-Stake will make Ethereum more robust and decentralized. Vitalik Buterin says that decentralization is extremely vital for Ethereum's base layer, and it would go a long way in protecting the longevity and future of the blockchain.

In conclusion, The merge is the most significant upgrade in Ethereum’s history so far as it is one of the most anticipated events in the blockchain space with over 366,296 out of 1,980,896 mentions in social media posts on Twitter and Reddit.

The Ethereum merge automatically sets as a wireframe for key improvements and other advancements hoping to be made on the Ethereum network in the future with scalability arguably being a very crucial factor.

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