Ethereum 2.0: why is the merger so important, and what to expect from it?
By Oleksii Haiduchyk 1955 5 Aug 2022
Everyone in the cryptocurrency world has repeatedly encountered this topic, either an experienced investor or a newcomer. Many people have tried to figure it out, but not everyone has succeeded. We will explain the merger in a more accessible language.
What’s new about Ethereum 2.0?
Ethereum is a community-controlled technology (platform) that powers the cryptocurrency Ethereum (ETH) and serves to create and manage decentralized apps (about 80% of the world’s apps), asset storage, and transactions. It is the first programmable blockchain with the support of smart contracts.
Since its launch (July 2015), Ethereum has gained impressive capital and great popularity. This has led to several problems: network congestion, reduced transaction speeds, and high carbon emissions.
Ethereum 2.0 is an update designed to solve these problems, particularly security issues. Like all other cryptocurrencies, the platform currently uses the Proof-of-Work (PoW) consensus algorithm. After the merger, the Proof-of-Share (PoS) algorithm will be used.
How is Proof-of-Stake better?
Proof-of-Work is a consensus algorithm in blockchain networks, which involves converting electricity into a digital blockchain “load”. In other words, it provides proof based on the work performed due to computational power.
Proof-of-Stake is an algorithm based on the necessity to prove the storage of a certain amount of funds in an account. This solves the problems of scalability and transaction speed. It also prevents an application from slowing down the network. There is no mining in this scheme, which means there is no reward per block.
It is worth noting that mining is still one of the most problematic parts of the crypto world (in early 2022, PoW was almost banned in the EU). It is predicted that the full launch of Ethereum 2.0 can solve this problem.
When will the merger happen?
The merger represents the transition from the PoW algorithm to the PoS algorithm, which signifies the complete end of the former. The process started long ago, and as we can see from the delayed launch dates, it is not easy. Still, the developers are confident that the process will be completed as early as the autumn of 2022, on September 19.
This is one of the most important events in the crypto world, and most fraudsters have already prepared to take advantage of it. Experts advise users and ETH holders not to take any action until this process is completed. All funds stored in the wallets will be available in full after the merger.
What will happen to the price?
There is a misconception that Ethereum 2.0 will significantly increase network throughput, resulting in a lower price. But this is not the case. The implementation of the algorithm is not aimed at that. The developers have plans for this as well, but the work in this regard will be launched only after the successful completion of the merger.
No need to worry
The developers claim that there is no need to worry. They are not interested in the speed of the process but in its quality. The main goal in the future is to scale. The merger is only the first stage of five.
As we know, any news can stir up the market, especially another launch postponement news. But, Ethereum 2.0 has all the chances to start up as early as this year. The merger could be the impetus for the rapid development of the cryptocurrency world. It is undoubtedly one of the most important events of this year.