This summer may finally see the long-awaited update to the Ethereum blockchain.
Ethereum co-founder Vitalik Buterin predicted that “the merge” would be finished this summer while speaking at the ETH Shanghai Web 3.0 Developer Summit last week. With this revolutionary update, Ethereum will transition from a proof-of-work model to a proof-of-stake one.
The merger will take place in August if there are no issues, according to Buterin.
What Is Ethereum 2.0?
Ethereum 2.0 is a new iteration of the Ethereum blockchain that will use proof-of-stake consensus instead of proof-of-work to validate transactions through staking.
The proof of work model, in which cryptocurrency miners employ powerful computers to complete intricate mathematical operations known as hashes, will be replaced by Ethereum 2.0’s staking mechanism. Ethereum transactions are verified by miners before being added to the public blockchain, which uses an increasing amount of electricity.
Systems that use proof of work consume lots of electricity. For instance, the annualized energy consumption of bitcoin mining is currently 127 terawatt-hours (TWh). That currently consumes more energy than the entire nation of Norway.
ETH currently uses about as much energy annually as Finland and produces carbon emissions comparable to Switzerland. Thankfully, the merger is anticipated to cut Ethereum’s carbon footprint by up to 99.95%, addressing one of the cryptocurrency’s major criticisms.
What Differs Ethereum from Ethereum 2.0?
Ethereum has been running two parallel blockchains since April 2022: a test chain that uses proof of stake and a main chain that uses proof of work. Through the merge, the old Ethereum Mainnet blockchain (ETH1) and the brand-new Beacon Chain (ETH2) will be combined into a single, integrated blockchain.
The ETH1 and ETH2 terminology was recently dropped by Ethereum developers due to worries that it would confuse users before the merge.
Some cryptocurrency owners may have been perplexed by what appears to be two versions of Ether, the native currency of the Ethereum Network, on Coinbase and other well-known exchanges.
Users stake their Ethereum on Coinbase, which is converted from ETH to ETH2 and has the same price for both. These two forms of Ether will be merged into a single token once the process is finished.
Bitcoin vs. Ethereum
The two most widely used cryptocurrencies are Bitcoin and Ethereum, which together make up 63.6 percent of the market capitalization for all cryptocurrencies.
In the last three years, the price of Ethereum has increased by 648%, more than double the 250% growth rates of Bitcoin.
From an ESG standpoint, the merger will make Ethereum a more appealing investment than Bitcoin, but Ethereum won’t necessarily overtake Bitcoin as the leading cryptocurrency in the world.
According to Chris Kline, co-founder and chief operating officer of Bitcoin IRA, Ethereum and Bitcoin are more complementary than competitive in the cryptocurrency market.
Ethereum and Bitcoin have different uses. Bitcoin is a limited-asset, proof-of-work cryptocurrency, whereas Ethereum serves as the backbone of Web 3.0. Both are essential and distinctive components of the current digital asset ecosystem, according to Kline.
The next significant milestone on Ethereum’s path to proof of stake will occur in June, while cryptocurrency investors wait for The Merge later this summer.
In June, Ethereum is anticipated to finish a significant trial for the merger using the Ropsten test network. Only two more test networks need to be upgraded by Ethereum developers after the Ropsten upgrade is finished before the main Ethereum network merges.