The second largest cryptocurrency, Ethereum (Ether, or ETH), has completed a plan to substantially cut carbon emissions with a software upgrade known as “the Merge.” It’s about an upgrade in the security architecture that supports the digital coin’s blockchain, the second most essential piece of infrastructure in the crypto ecosystem. Ethereum employed “proof-of-work” (PoW) to validate transactions on the network and to guarantee that everyone in the community agreed on who held what virtual coin.
With the completion of the Ethereum Merge, the switch to a “proof-of-stake” (PoS) method has eliminated the necessity for mining, and has given birth to a new digital coin – Ethereum 2.0. It resulted in decrease in Ethereum’s energy usage and the possibility of extending the Ethereum ecosystem even further.
Keep reading to understand Ethereum’s expectations and what the Merge actually is.
Ethereum’s planning to reduce its energy consumption by ~99.99%, functioning now with ~99.95% less energy than before the Merge. Even though its carbon debt is now low, this wasn’t the case until mid-September 2022.
The migration has transferred the whole blockchain to new PoS validator nodes, which require locking up or stacking 32 Ether (ETH) in order to participate. For investors, Ether coins are unchanged, and Ethereum-based apps should continue to operate normally.
Ethereum intended to adopt a PoS consensus mechanism initially, but achieving this without sacrificing decentralisation and security required years of intense development and research. As a result, a PoW process was utilised to get the network up and running. This demands miners use their computational hardware to determine a value, which consumes energy. The blockchain’s overall energy usage peaked at a little under 94 TWh/yr during the peak of the crypto bull market in February 2022. Prior to the implementation of PoS, energy demand was comparable to that of Uzbekistan, or closer to 78 TWh/yr, with carbon emissions of 33MT/yr, similar to that of Azerbaijan.
The impact of Ethereum’s switch from PoW to PoS was investigated by CCRI, which concluded that annualised electricity usage was lowered by 99.98%, according to the Ethereum Foundation. Similarly, the blockchain’s carbon footprint has been reduced by 99.992%.
According to the website, this equates to a reduction in emissions from the height of the Eiffel Tower to the size of a little plastic toy figure. As a result, the environmental cost of network security is dramatically lowered, and network security is considered to have improved.
And if you’re wondering if Ethereum’s upgrade impacts the Bitcoin price USD (since it’s a natural question, as Bitcoin is the #1 cryptocurrency), know that the effects are minimal. Ethereum is now being seen with better eyes, and crypto enthusiasts are waiting for the BTC blockchain to follow Ethereum’s example. However, the validation process for Bitcoin is competitive, energy-intensive, and rewards-based, so it’s hard to predict when this technology will become environmentally friendly, if ever.
If you want to invest in cryptocurrency this year but don’t want to harm the environment, there are more sustainable digital coins you can choose from:
Through PoS, a financial incentive to prevent fraudulent transactions is provided. The long-awaited enhancements strengthen Ethereum’s security against coordinated assaults because the validators that protect the network under PoS must stake huge sums of Ethereum into the protocol. Should they attempt to assault the network, the protocol will destroy their Ether, and probably no dishonest validator wants to risk losing money for uncertain profits.
If you want to invest in Ethereum, Bitcoin, or any other cryptocurrency, you must use strong passwords for the accounts on the chosen exchange. You are advised to use a long combination of characters, symbols, and numbers because most account hacks are a consequence of weak passwords. Don’t make the common mistake of using dictionary words because you risk being the victim of a “dictionary attack”. Here’s an example of a strong password: 8#[email protected]*12. And this is how a weak password would sound: 26ofseptember.
Also, don’t use passwords that can be revealed through social engineering —not the date of your birth, your dog’s name, or an inside joke with your spouse. Avoid common dictionary words and personal details. Instead, use a mixture of symbols, numbers, lowercase, and uppercase, and make passwords as long as the form you’re filling out allows you to.
Extra tip: Using a password manager eliminates the need to create and remember strong, unique passwords. This provides an encrypted and safe storage location for your passwords and can be accessed with a single strong passcode. Plus, such apps can also recommend strong passwords, so you don’t have to stress about creating one yourself. Some will also inform you if you are a victim of a data breach and allow you to reset your passwords before any unwanted attempts are made.
Nodes are essential to store and operate the blockchain, and Ethereum must be able to process more transactions per second without growing their size. It’s expected that transactions will occur faster and that extra nodes will be added because increasing the size of the existing ones would be impractical and require expensive and powerful computers. Ethereum is looking for sharding upgrades to remove the need for every node to hold 100% of data and to distribute data storage requirements over the whole network.
Sharding should optimise efficiency on rollups, allowing for more advancements than the actual 15-45 transactions per second limit.
To summarise
The Ethereum network changed from proof-of-work to proof-of-stake as a result of the Merge, a software upgrade that put an end to the mining era and consequently lowered the blockchain’s energy usage by more than 99%. You can trade ETH now without worrying about the environment because, according to Ethereum.org, this technology now uses an amount of energy similar to what the Netherlands consumes.
All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed as investment advice.
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