BT Daily News: The Ethereum Merge Is Done, Opening a New Era for the Second-Biggest Blockchain
1. The Ethereum Merge Is Done, Opening a New Era for the Second Biggest Blockchain
The massive overhaul of Ethereum known as the Merge has finally happened, moving the digital machinery at the core of the second-largest cryptocurrency to a vastly more energy-efficient system after years of development and delay. It was no small feat swapping out one way of running a blockchain, known as proof-of-work, for another, called proof-of-stake.
In the minutes immediately following the Merge, ETH – whose current market value near $200 billion makes it the second-largest cryptocurrency after bitcoin (BTC) – was trading at $1,632, down about 0.4% in the previous 24 hours.
The update’s complexity was compounded by the fact that it may have been one of the largest open-source software endeavors in history, requiring coordination across dozens of teams and scores of individual researchers, developers and volunteers.
"This is the first step in Ethereum's big journey towards being a very mature system, but there are still steps left to go," said Vitalik Buterin, Ethereum's co-creator, as he reflected on the Merge during Thursday's viewing party. He went on to mention Ethereum's relatively high fees and slow speeds, which were not addressed by the update, but remain as much a barrier to growing the network's user base as environmental concerns ever was.
That upgrade was initially slated to accompany the transition to proof-of-stake, but it was deprioritized given the success that third-party solutions – called rollups – have had in solving some of the same issues. Rollups foreshadow the likely future for Ethereum development, where community solutions – rather than updates to Ethereum’s core code – play the primary role in expanding the chain’s capabilities.
2. Downsides of Proof-of-Work and Proof-of-Stake, explainedWhat are the main types of nodes in existence?
Proof-of-Work and Proof-of-Stake are arguably the best-known consensus mechanisms — but new ones are continually emerging.
How efficient are these consensus mechanisms?
There are a few ways of measuring this: Gas fees, block confirmation times, and scalability.
What are the hurdles that currently stand in the way of validating transactions?
Wherever you're involved in PoW or PoS, the barriers to entry can be pretty high.
How can PPoC benefit everyday users?
Beyond staking, blockchains that use PPoC can make using cryptocurrencies as an everyday payment method far more practical.
How exactly does Eurus work?
This is a Layer 1 blockchain that is based on sidechain technology — by using an interoperable bridge protocol able to connect the Eurus mainnet with Ethereum or other networks.
3. Ethereum Merge: what it means for the crypto-currency industryA successful transition to PoS would flag a huge signal to regulators that the crypto industry has the power to adapt in a way that prioritizes our planetary well-being. As we consider the White House Office of Science and Technology Policy’s (OSTP) report on Climate and Energy Implications of Crypto-Assets in the United States, the Ethereum Merge will likely invigorate further research and collaboration between the crypto industry and Congress.
The OSTP stated in the report that: “Federal agencies should provide technical assistance and initiate a collaborative process with states, communities, the crypto-asset industry, and others to develop effective, evidence-based environmental performance standards.” Other recommendations included assessing and enforcing energy reliability in light of crypto-mining projects, setting energy efficiency standards, and research and monitoring. This assessment demonstrates that the White House acknowledges the positive contribution crypto-mining can make to the nation’s clean energy transition.
In parallel with the Ethereum Merge, this acknowledgment should serve as an incentive for PoW-based applications and miners to utilize clean, renewable energy sources. Doing so would attract lucrative financing from ESG-conscious business leaders keen to make green investments. Similarly, sustainable crypto-mining would also draw the regulatory support needed to amplify and scale the industry’s capacity to achieve its full potential as a valuable job creator, wealth builder and city developer. The possibility for further expansion in this space in lockstep with climate-positive Web3 innovation remains steadfast.
4. Top 5 Trends Shaping Crypto Mining Future: What Awaits MinersRecent discussions about proof-of-work (PoW) mining and its benefits and drawbacks make it worth considering the market's future. How will mining change in the coming years, and what can miners do to prepare?
Here are a few trends that cryptocurrency miners should be aware of:
Renewable Energy Application: Indeed, one of the reasons for the Ethereum blockchain's transition to PoS is environmental concerns.
Miner Obsolescence: Perhaps the most significant consequence of many coin developers' shifting to PoS is that miners may soon become obsolete.
Increasing Hashrates: The hashrate measures the resources needed to conduct mining operations and secure the Bitcoin blockchain.
Reduced Margins: Miners will most likely have difficulty logging profits from their activity as mining difficulty and hashrate rise. However, this will depend on the Bitcoin price moving consistently over time. If this occurs, rewards could be cut in half, with competition eventually eating away at the high margins that miners have enjoyed thus far.
Chip Shortages: Finally, there is expected to be a severe shortage of chip availability in the future.
5. China back among top 10 countries in Bitcoin usage despite banBlockchain analytics firm Chainalysis has released its 2022 Global Cryptocurrency Adoption Index detailing global usage of bitcoin and cryptocurrencies with a unique ranking formula.
The report’s most staggering bits of information show that, despite last year’s ban, China has returned to rank among the top 10 countries in the world for adoption. Additionally, Vietnam is still ranked first and the U.S. has risen to fifth when it was previously ranked eighth in 2021.
However, when one looks at this report it becomes far more interesting after realizing how Chainalysis ranks adoption. Five separate indexes cumulatively provide the overall index score of each country, and the indexes allow for a weighted calculation based on the percentage of income spent to acquire bitcoin and cryptocurrencies.