The Ethereum blockchain will undergo a major upgrade to reduce energy consumption

The update, known as “Fusion”, will mark a sea change in the way transactions take place on the Ethereum blockchain and how Ether tokens are created. The new system will consume 99.95% less energy, according to the Ethereum Foundation https://ethereum.org/en/upgrades/merge/, an organization that acts as a spokesperson for the network.

The exact timing of the merger is unknown, but Google and other blockchain tracking sites predicted Monday that it would occur in the early hours of Thursday. The Ethereum Foundation has stated that it will take place from 10 to 20 September. The event has already been postponed several times.

If successful, Ethereum will move from a “proof of work” system – in which energy-intensive computers validate transactions by solving complex mathematical problems – to a “proof of participation” protocol, in which individuals and companies act as validators. , using theirs as collateral, with the aim of earning new tokens.

Ether is the second largest cryptocurrency after bitcoin, with a market cap of around $ 200 billion, according to data site CoinGecko. There are roughly 1 million and 1.5 million transactions per day on the Ethereum blockchain, compared to 200,000 300,000 for bitcoin, according to data from CoinMetrics.

Cryptocurrency prices plummeted earlier in the year as a general slowdown in financial markets prompted investors to move away from risky assets. Ether has risen about 65% since the end of June before the merger, while bitcoin has seen little change.

“This is a very important development in Ethereum’s overall evolution plan,” said James Malcolm, head of UBS’s FX strategy. However, he added that this would not necessarily have an impact on the price of Ether as the merger is already priced.

ENERGY SAVING?

The high energy consumption of crypto and blockchain technology has drawn criticism from some investors and environmentalists. According to researcher Digiconomist https://digiconomist.net/ethereum-energy-consumption, a single transaction on Ethereum currently requires the same amount of energy that an average US household consumes in a week.

For backers, the energy saving upgrade represents a big step forward in the race to become the best blockchain in the world.

Ethereum has become the blockchain of choice for various functions in the world of decentralized finance, including smart contracts and projects involving tokens that represent traditional assets such as stocks and bonds.

Proponents of Ethereum say that this technology will form the basis of a new financial system, where money and assets can be exchanged in the form of crypto tokens without the need for traditional financial service providers.

Others see it as the cornerstone of what is called “Web3”, a much discussed but yet to be realized iteration of the Internet, in which blockchain and cryptocurrencies occupy a central place.

Yet the ether has so far seen little mainstream adoption as a means of payment, with trade being by far the most popular use.

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