Cryptocurrency: What is ‘the Merge’ and when will the software upgrade for the Ethereum platform take place?
Years in the making and set to take place in September, ‘the Merge’ will be the most significant upgrade of Ethereum, the most widely used blockchain.
Starting around mid-September, the Ethereum blockchain will undergo a major shift, known as ‘the Merge’, affecting how transactions are verified on the most widely used crypto platform. The current Mainnet that contains every transaction, smart contract, and balance since it began in July 2015, which uses “proof of work”, will be merged with the Beacon Chain, which uses “proof of stake”.
The change will give the network to “more scalability, security, and sustainability” according to Ethereum. Proponents of the new system say it will be more egalitarian than the current method of mining because there will be a lower barrier to entry.
Why Ethereum is carrying out ‘the Merge’
Currently, Ethereum infrastructure uses “proof of work” like Bitcoin to verify crypto transactions and maintain the decentralized ledger. Miners compete with each other to be the first to solve complicated puzzles to add new blocks of data to the blockchain.
This is highly energy intensive consuming vast amounts of electricity, in the case of Ethereum and Bitcoin combined, their consumption is slightly less than that of Indonesia. By switching to “proof of stake” it could reduce the amount of energy needed to reach a consensus for new blocks to the Ethereum blockchain by over 99.9 percent.
Instead of miners competing, validators place a minimum stake of 32 Ethereum digital coins to participate in the validation mechanism. The larger the stake a validator puts in the better chance they will have of being selected to check that new blocks propagated over the network are valid and thus the monetary reward that comes with it.
However, if a validator behaves in an improper way, their stake can be destroyed. The economic penalties in “proof of stake” should make the blockchain more secure by increasing the cost for a potential perpetrator of a 51-percent attack, which is when miners with majority network control can interrupt the recording of new blocks. Likewise, the community can recover the honest chain collectively should an attack overcome the crypto-economic defenses.
‘The Merge’ is a complex undertaking
Even before the Ethereum blockchain began adding transactions to its ledger in 2015, the founder of the crypto platform, Vitalik Buterin, envisioned using “proof of stake”. However, the new infrastructure is much more complex than “proof of work”. It has taken years of research and development to refine the mechanism.
In late 2020, the Beacon Chain was launched and has been running parallel to the Mainnet, the existing execution layer of Ethereum. Since then, tests have been run on the Beacon Chain for it to reach consensus on its own state while the Mainnet validated transactions and added new blocks to the blockchain.
Ethereum compares ‘the Merge’ to a spaceship hot-swapping the old engine for a new one mid-flight so that it will be ready for an interstellar voyage. Sometime around the middle of September the Beacon Chain and the Mainnet will become one with the former becoming the engine of block production.