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Is Ethereum Switching

Is Ethereum Switching to PoS the Right Idea

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The entire macroeconomic situation is quite dire and markets conserve their downwards momentum. Meanwhile, Ethereum has been showing some signs of strength. When compared to bitcoin, the #1 smart contract token has been gaining a lot of ground. So much so that it’s now nearing the levels of the peak of the bull market in BTC value. 

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The main reason for Ethereum maintaining and even gaining value in this bear market is the upcoming Ethereum Merge. The final stage of this network upgrade for Ethereum will take place in September 2022 and will mark the switch to a proof-of-stake network. 

This should reduce Ethereum’s energy requirements by 99% and make it infinitely more scalable for mass usage. But what is the Ethereum Merge?  How does it benefit Ethereum? Will it provide you with good opportunities to purchase ETH on an anonymous cryptocurrency exchange? 

We try to answer these questions in the article below and give you advanced insight into this huge milestone in the crypto industry. 

Ethereum Before the Merge: Technicalities

Ethereum is the first smart contract-capable platform that was released back in 2015. It provided blockchain technology with an exponential rise in use cases. Prior to Ethereum, cryptos were solely used to send currency over the internet. Ethereum introduced decentralized applications. They allow users to deploy software on the blockchain and benefit from the security and immutability of the technology. 

The network currently runs on a proof of work consensus mechanism. This means that miners use powerful computers to solve mathematical puzzles to reach a consensus on the network. This process allows for verifying transactions and creating new ETH tokens. 

Current Problems of the Network

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The popularity of Ethereum due to its pioneering status in the industry is indisputable. However, this popularity also came with a large number of setbacks. Every communication with smart contracts requires a transaction on the chain, which amount to millions per day. 

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However, PoW consensus doesn’t scale well with mass usage. It can process only 15 transactions per second. To add to this, the high demand for transactions has often saturated the network. This caused slowing down execution and skyrocketing transaction fee prices. 

What’s more, as more users join the network, the miners’ computation strain increases, which in turn, increases the energy demand. 

Ethereum After the Merge: Technicalities

Due to these major shortcomings of PoW, Ethereum developers have been implementing a switch to PoS since December 2020. This upgrade is supposed to decrease Ethereum’s power usage by 99% and provide much higher scalability. This should allow Ethereum to provide its original use case. The initial goal was to become a global supercomputer for running decentralized applications. 

Will the Update Fix the Issues?

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PoS doesn’t require miners to validate transactions, which directly reduces the power consumption of the network. Validators require commercial-grade hardware. This makes them much more viable regarding their environmental impact. 

Ethereum’s PoS will be able to execute as many as 10,000 transactions per second, at a lower price than it’s currently possible. Moreover, the upcoming sharding upgrade will provide linear scalability. That could increase this throughput exponentially. At this point (sometime in 2023) the Ethereum beacon chain will work in parallel with sharded chains. That will alleviate the computational work of the main blockchain. 

All in all, the switch to PoS is the logical evolution for Ethereum to become a genuine platform for the upcoming web3 revolution. 

Final Note 

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Even though it has a good dozen of direct competitors today, Ethereum remains the #1 smart contract platform. Its pioneering status has allowed it to maintain this popularity. Its huge developer community has contributed to launching an ecosystem of functional software. 

The Merge will only make Ethereum a better network and probably continue to create buying pressure and increase ETH prices. This could be a great opportunity to convert ETH to BTC and make some considerable profits while BTC is still lagging behind. 

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