The merge will transition the blockchain from a proof-of-work PoW model to a proof-of-stake PoS model.
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Both are algorithms used to allow users to add new cryptocurrency transactions and keep a record of them on a blockchain network. The current proof-of-work model requires massive amounts of energy to power computers that race to solve complicated math equations in order to validate transactions.
Proof of stake, on the other hand, requires users to have a "stake" in the blockchain, as the name implies. But before investors get too ahead of themselves, there needs to be an understanding of whether or not Bitcoin and Ethereum are even competing.
Follow The Ethereum Merge Is Complete. Here's Why That's Important On Wednesday night, a few minutes before midnight, ethereum officially adopted proof of stake. Daniel Van Boom Sept. PT Daniel Van Boom Senior Writer Daniel Van Boom is an award-winning Senior Writer based in Sydney, Australia. Daniel Van Boom covers cryptocurrency, NFTs, culture and global issues.
Which is better, Bitcoin or Ether? He sees Bitcoin as an investment asset that can act a store of value, whereas Ethereum is a distributed blockchain network that powers not only Ether, but also many other decentralized software systems. However, Johnson added that he views the market's increasing attention on the Bitcoin and Ether as a good thing since it means getting more investors interested in the market.
Investor takeaway As speculation builds surrounding the potential for Ether to overtake Bitcoin at some point down the line, Johnson told INN the market should welcome the increased attention that this competition is creating.
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It's like a bus doing routes with no passengers just to make sure the engine runs properly. The Merge saw the data held on ethereum's mainnet transferred to the beacon chain, which has now become the prime blockchain on ethereum's network.
Continuing with the bus metaphor, it's as if all of the commuters from the old, less efficient buses are now being loaded onto the buses running less energy-intensive engines. Are there any risks?
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Critics of ethereum -- typically bitcoin enthusiasts -- compare the merge to changing the engine of an airplane in the middle of a passenger flight. On a technical level, there could be many unforeseen bugs with the new blockchain.
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- The Merge and energy consumption The Merge marked the end of proof-of-work for Ethereum and start the era of a more sustainable, eco-friendly Ethereum.
Critics also wonder whether proof of stake will be as secure as proof of work. Charbonneau reckons it could be safer because of a function called "slashing" -- in essence, validators can have their staked ether burned, and their network access revoked, if they're found to have acted maliciously.
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With proof of stake, it's really simple. If you attack the network, it's provable and we just slash you, and then your money's gone.
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Then you can't do it again. This has been a hotly debated topic within crypto circles in recent months, and no one knows for sure what the Merge will do the ether's price.
There are two primary reasons people predict ether's price will skyrocket following the Merge. First is the idea that ethereum fractioning its carbon footprint will make it easier for big companies to both invest in ether and create ethereum applications.
Mining ethereum is costly; as electricity prices have gone up and crypto prices have gone down, even successful mining operations have begun to see red. To offset costs, miners typically sell most of the cryptocurrency they earn from mining. That creates millions of dollars of sell pressure each day as miners offload their ether.
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Up to 1. Traders hunting an edge are now trying to figure out how this sudden ether windfall might hit prices.
Why all the hype?
Tapscott told INN it's possible that not everyone operating under the current Ethereum blockchain will go along with the merge. He pointed to the variances of Bitcoin, Bitcoin Cash and Bitcoin SV as prime examples of this effect. Both Tapscott and the report from Purpose Investments downplay the possibility of a fork, indicating that even if there is a divergence, proof-of-work would represent a low total market cap within Ethereum.
Of course, the merge itself will also have to happen smoothly. Soloway told INN it will be critical for the transition to go well so as not to damage the image of cryptocurrencies.
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This critical event will act as proof that these networks are able to adjust on the fly while supporting their various partners and applications, Tapscott said. Investor takeaway Experts agree that the Ethereum merge is likely to be one of the most significant events in the history of the cryptocurrency market so far.
With the potential to lower energy demands and attract a more stable investor base — all while demonstrating that the Ethereum platform can make a crucial update without affecting those who depend on it — it's clear this event has a lot to prove for the entire blockchain space.