Featured RockItCoin ATMs were just added in Tennessee! See our featured locations.

The Ethereum Merge, and What it Means for Crypto

Posted on August 31st, 2022 by RockItCoin

One of the biggest headlines in crypto news as of late is “The Merge” – Ethereum’s shift from proof-of-work to proof-of-stake. Now that Ethereum developers have confirmed that the long-awaited update will take place between September 10th and 20th, let’s cover what the update means for the #2 cryptocurrency!

How The Merge Works
Ethereum currently operates on a proof-of-work Execution Layer (The Mainnet), which is the main public blockchain that Ethereum has used since its launch in 2015. This can be described as a “Layer 1” blockchain since it’s the foundational system or blockchain.

In December of 2020, Ethereum developers set the Consensus Layer (The Beacon Chain) live to run on top of the Mainnet, which is why it is called a “Layer 2” solution. This update set up the Ethereum blockchain for staking and scalability in future updates.

The event known as “The Merge” is when the two layers combine, making the Ethereum Mainnet operate on a consensus-based proof-of-stake system but keeps addresses and transaction history intact. Current owners of Ethereum do not have to do anything to prepare for the Merge.

The combining of the two layers will take place in two updates. The first update, Bellatrix, is a network upgrade to the consensus layer and will occur on September 6th. It will be followed by the Paris update, which takes place on the Execution Layer at a Terminal Total Difficulty of 58750000000000000000000 (which should happen between Sept. 10th & 20th) and merges the two together. Once the new structure finalizes a block on the Consensus Layer, the merge is considered complete!

Diagram of How the Merge Works (Source: Ethereum.org)

What are the Benefits of The Merge?

Environmentally Friendly
The Merge addresses one of the biggest criticisms of proof-of-work cryptocurrencies: their environmental impact. Since proof-of-work cryptocurrencies need to be mined, it can take a lot of energy to power the entire network. However, with the Merge making the network proof-of-stake, Ethereum’s energy use will be reduced by 99.95%, according to the Ethereum Foundation.

Transaction speed & volume
Another important update the Merge brings is the process of sharding. This process segments and distributes the network into smaller, parallel chains to spread the load across the network. Sharding will reduce network congestion and lower transaction fees, which is something Ethereum has suffered from in the past. The number of transactions per second that the network can process will increase drastically, from about 30 transactions per second to a potential 100,000 transactions processed per second.

What The Merge Means for Crypto
Cryptocurrency can be used by anyone, anywhere, at any time. However, transactions can be particularly expensive when it comes to mining fees, which Ethereum has had to deal with for years. Vitalik Buterin, the founder of Ethereum, said that “If you want to actually have a world where we can have blockchain activity happening without needing to trust centralized exchanges for everything, then we just have to learn how to make blockchains cheaper.” The Merge is just the beginning of blockchain technology becoming more usable and accessible by everyone worldwide.