Merge is a hot topic of discussion in the ecosystem Ethereum for many years now. Edited version 3rd from the Whitepaper (white paper) Ethereum originally referred to PoS in 2014. According to Vitalik Buterin, both PoW and PoS can “act as the backbone of the field.” cryptocurrency".
“The mechanism behind PoW is groundbreaking in the space… but there is an alternative approach that is PoS, which calculates the weight of a node proportional to its coin holdings, not computational resources… It should be noted that both approaches can be used to form the backbone of the industry cryptocurrency. In the future, there is a possibility Ethereum will switch to a PoS model for security.”
Thus, it has been almost 9 years since the Whitepaper was published and the ambition to switch to PoS has not yet come true.
September 15, 2022 is a big day
However, Merge is now officially scheduled for September 2022. More precisely, a developer Ethereum already calculate project block height was reached at 03:57 on 9/15 (Vietnam time). This day can be noted as the most important day in the history of the Internet.
Merge is important not only because it is the culmination of many years of work by the Ethereum developer community, but also because it solidifies Ethereum as one of the most important building blocks for the future Internet. It enhances security while reducing energy consumption, thus becoming a viable mechanism for companies with ESG requirements.
Ethereum PoS will remove the false story that PoW is bad for the environment while reducing issuance to 90%. Ethereum inflation currently stands at 4.3% and will drop to around 0.4% post Merge, while key fiat currencies are currently recording 40-year highs.
With Merge happening less than a month away, this upgrade is a major topic of conversation among major players in the space. According to investors Lark Davis, ETH is also superior Bitcoin, up 62% from local lows in July.
"ETH extremely impressive. Honestly, I think it won't hit 0.08 BTC again this year, but here we are. There are still a few weeks left until the Merge rollout. Another reminder why ETH is an important part of a portfolio”, Benjamin Cowen tweets.
Merge is one of the most technically advanced code upgrades in the history of the Internet. Ethereum stores more than 500k ERC20 tokens according to data on-chain, which means half a million projects rely on Ethereum to settle transactions in their ecosystem. There are also around 4,000 decentralized applications (dApp) on Ethereum and over 500k active addresses.
The entire network will be merged with the Beacon Chain, changing the consensus mechanism, while the network continues to generate blocks. There will be no downtime and all applications continue to function during the upgrade.
Many Web 2.0 applications require the server to be restarted or put in “maintenance mode” when performing critical updates. Ethereum is not such a luxury. Merge will occur while the network continues to operate.
After the Merge is successful, the new PoS version of Ethereum will perform a “triple halving”. Bitcoin halving about every 4 years, halving the issuance Bitcoin. This effect is often said to kick off the next crypto bull run.
When Ethereum moves to PoS, the network will issue 90% ETH less, which is equivalent to 3 halvings in a block. With PoW, Ethereum release 13k ETH per day, but according to the PoS consensus mechanism, it only mints 1,600 per day.
Not like Bitcoin, often referred to as “digital gold” and “store of value”, “Ethereum is a decentralized virtual computer called Ethereum Virtual Machine. It enables interactive, incentivized, programmable smart contracts and opens the door to applications that would not be possible in Web 2.0.”
Fred Wilson, the famous VC from Union Square Ventures, has publish Monday's blog post focuses on Merge and what it means for crypto. Wilson highlighted the three main points of Merge as reducing carbon emissions, changing Ethereum's supply/demand ratio, and increasing security.
Wilson also highlighted the potential for PoW fork after Merge. However, he did not make any predictions about the expected impact on the ecosystem.
“ETH POW can grow a community around it and survive, providing value to developers… ETH POW tokens can be worthless or have huge value over time. There is really no way to know how ETH POW will develop.”
Despite the unexpected risk following the launch of the ETH PoW token, Wilson believes that “Merge is probably the most important change that blockchain the large-scale expansion experienced”.
The future of the Internet
Web3 is now a popular term in technology, but it has not yet been accepted by the mainstream market. Ethereum may have been stifled by a major upgrade that cast doubt on its viability. When Beacon Chain is deployed on the mainnet, the future roadmap will be much simpler, allowing projects to launch on Ethereum without worrying that Merge may fail.
If Web3 is widely accepted and becomes a part of our daily lives, it is clear that Ethereum will be the main component. While layer 2 solutions will facilitate most transactions, Ethereum will continue to be the processing layer for a large portion of Web3. September 15, 2022 could go down in history as the actual birth date of Web3. Or, if the Merge fails, that could mark the moment of demise. We will follow this historic moment together.