Ethereum has completed a long-awaited upgrade to its system in a move that is expected to lower energy costs and aims to pave the way for more use of crypto technology in mainstream finance.
Upgrade, known in the industry as “merging,” which changes how new transactions are verified in Ethereum The blockchain, which was finalized early Thursday, said co-founder Vitalik Buterin.
Ethereum occupies large swathes of the Web3 world, which includes applications such as digital holdings and decentralized financing systems.
the teacherPromised by developers for many years, it was hailed as one of the most important moments in crypto’s short history by fans, who planned “merge parties” in cities around the world and followed live viewing parties on social media.
“This is the first step in Ethereum’s big journey towards being a very mature system. There are still steps left,” Buterin told developers.
The merger was a high-risk test for the crypto sector after the token price crash this spring, wiping out $2 trillion in the value of digital assets and shaking confidence in the market.
Changing the architecture that underpins the $200 billion Ethereum cryptocurrency, the token on the Ethereum blockchain, and tens of billions of related assets and applications, is fraught with risks from technical hurdles to bickering among participants in the decentralized network, even after the merger has taken place. accomplishment.
Its proponents anticipate that the successful merger will boost confidence in Ethereum, which was launched by Russian-Canadian programmer Buterin in 2015, and the many tokens and projects it is working on. blockchainas well as sharp criticism about its energy consumption.
However, the Ethereum developers said that they will need to monitor the network over the coming hours and days to ensure the upgrade runs smoothly.
“It’s a complex task,” said Edward Hendy, chief investment officer at hedge fund Crypto Tyr Capital. “One forgets a good tune…it can lead to a lot of volatility, and the market is in a panic.”
The consolidation is just one step in a plan that Ethereum developers have devised to overcome limitations in network capacity, which are seen as a major obstacle to achieving mainstream adoption of decentralized finance.
“[The Merge] Lars Seer Christensen, co-founder of Saxo Bank who now runs a blockchain project called Concordium, said:
Ethereum, like Bitcoin, has so far relied on network participants to solve complex math problems to validate new blocks, a process called proof of work. The energy consumption of Ethereum was similar to that of Finland.
The consolidation marks the moment when the existing Ethereum blockchain is connected to a new network where transactions are validated by a group of individuals and companies that have staked their tokens as security of the network, a system called Proof of Stake.
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The Ethereum Foundation estimates that replacing the proof of work will reduce blockchain power consumption by 99.95 percent. This will also eliminate the need for Ethereum miners, companies that make money from validating new blocks through Proof of Work.
The prospect of the merger helped boost the price of ether, which is up about 75 percent from its June low. Ether has gained ground against bitcoin, which has only recovered 15 percent over the same period.
However, the years-long effort to complete the upgrade underscored the difficulty of making improvements to the Ethereum blockchain. Transactions on the network are still hampered by slow speeds and high costs, which critics said limit the system’s ability to grow.
Hindi said the merger was “just one step in the right direction. There are three or four more steps. It’s a two or three year process. It’s a big, big plan that’s coming up and we’re going to have a lot of surprises on the way, good and bad.”
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