IG News report,
Cryptocurrencies are often criticized for being bad for the planet. Every year, bitcoin mining consumes more energy than Belgium, according to the University of Cambridge’s Bitcoin Electricity Consumption Index. Ethereum consumption is typically pegged at around a third of that of bitcoin, even though estimates vary. Although about 39% of the energy that goes into bitcoin mining comes from renewable sources, the industry’s carbon footprint is generally considered unacceptable, according to a 2020 Cambridge report. According to a 2019 study, bitcoin mining produces between 22 and 22.9 million metric tons of CO. is between2 every year.
The problem is that processing and verifying transactions for cryptocurrencies like bitcoin or ethereum’s ether on the blockchain requires specialized computers powered by eye-popping amounts of electricity, through a process called proof-of-work mining. . In this system, thousands of computers around the world (but mostly in the US, China, Kazakhstan, and Russia) compete with each other to solve a mathematical puzzle and earn the privilege of adding up a batch of transactions, or “Block”. to bookkeeping. The miner who prevails wins a crypto reward.
Most bitcoin advocates will tell you that proof-of-work mining is essential to keeping the network secure, and would never dream of tampering with something envisioned by the currency’s pseudonymous creator, Satoshi Nakamoto. But Ethereum is on the verge of a major change that will substantially reduce its environmental impact.
Ethereum, launched in 2015 by a 21-year-old whiz kid named Vitalik Buterin, is about to swap out proof-of-work mining for an alternative system known as proof-of-stake, for which energy- Guzzing does not require a computer. The Ethereum Foundation, a research non-profit that leads updates and improvements to the Ethereum blockchain, says the change will reduce the network’s energy consumption by 99.5 percent. The big switcheroo is known as a merge—and it’s due out on September 14.
What is Merge?
The merge hinges on the fusion of Ethereum’s current proof-of-work blockchain with Beacon Chain, a proof-of-stake blockchain that was launched in December 2020 but has not yet processed any transactions.
Some of the upgrades, launching over the next few weeks, will lay the groundwork for one series to the next. Justin Drake, a researcher at the Ethereum Foundation, says the way the process is structured can be compared to a car switching from an internal combustion engine to an electric one. “How do we do that? Step one: We install an electric engine in parallel with the gasoline engine. And then — step two — we connect the wheels to the electric engine and shut down the gasoline engine. That’s exactly what’s going to happen in the merge.” “We’ve had this parallel engine of the beacon chain for a year and a half—and now the old ‘gasoline’ proof-of-work engine is going to be discontinued,” Drake says.
After years of delay, the Ethereum community is positive that the long-awaited turnaround will finally happen, following a successful dry run on a test blockchain, called Goerly Chain, on August 10th. the fact that Buterin has a book titled proof of stake Coming out in September is probably a coincidence.
How will Ethereum’s Proof of Stake work?
Talking about proof of stake is like talking about French cheese: there are innumerable varieties—hundreds of cryptocurrencies claim to use some version of the process. However, at its most basic level, proof of stake is based on the idea of securing a network through incentives rather than hardware.
In this scenario, you don’t need an expensive mining computer to participate in the network: you can use your laptop to put down a “stake”—a certain amount of cryptocurrency locked in the network. This gives you the chance to validate a certain block and to earn crypto rewards and fees, usually selected through a random process. For example, if you try to game the system, for example, by doctoring a block, the network will penalize and destroy you, or “slash” some or all of your stake.