Several times postponed and equally feared, the great migration will take place by Thursday despite a hectic market. Newbies and blockchain and cryptocurrency experts have marked the date on their calendars because a real revolution of the second most important “blockchain” after Bitcoin begins. This technical and historical update opens a new era and will have implications in the medium term and in everyone’s daily life. Here is what you need to remember and assimilate to fully understand the issues of “The Merge”.
What happens by Thursday?
A real systemic change for the Ethereum blockchain that will go through the Fusion box (“The Merge” in English). Created in July 2015, this decentralized exchange protocol has so far been based, like Bitcoin, on the validation of transactions or on the production of “tokens” with the method of “Proof of work” in English (“Proof of Work”). In concrete terms, these IT operations require a large amount of computing power and therefore powerful installations such as servers and graphics cards to “undermine”, or to validate a block of encrypted and secure data and obtain a reward in return. Competition with proven environmental costs.
Thousands of Ether “miners” will therefore inevitably find themselves in technical unemployment but for a good cause, according to the promoters of this expected transition. Criticized for being an energetic abyss, this method will be replaced by the “Proof of participation” (“Proof of stake” in French) where the validators will have to place a stake of 32 Ether, the cryptocurrency associated with Ethereum, in a common pot, or about 50,000 euros. And believe in their lucky stars. “The validation of a cryptocurrency will take place on a smart contract where it is blocked until a randomly chosen validator confirms each new block and then receives the associated reward,” explains Chainalysis.
The transition from an old protocol to a more modern one involves technical risks despite the numerous tests upstream. Major trading platforms such as Binance, Coinbase or BitPanda, for example, have plans to briefly block Ether trading. Useful accuracy, the date and time depends on extracting the last block in the old method and then switching to Proof of Stake. Many online countdown clocks indicate the fateful time.
Who carries out this delicate operation?
Critical parts of a still running engine will have to change. The upgrade to Ethereum 2.0 is completely decentralized. “There is no company behind it, but many developers around the world who want to show that this network has a future”, sums up Charlie Guillemot, co-CEO of Unagi, a start-up that publishes a fantasy football game with NFT. . The major players in the sector therefore did not hesitate to delegate part of their teams to this great project.
The new method gives pride of place to software rather than computing power, and transaction validators – and their powerful electrical installations – will no longer be essential to running the machine.
If the merger is successful, “Ethereum’s electricity consumption will decrease by 99%” assures us Joe Lubin, co-creator of Ethereum and boss of ConsenSys, publisher of the MetaMask portfolio in particular. The carbon footprint of the Ethereum blockchain is currently causing some artists and industrialists to boycott it, but the success of the transition “could, over time, increase the acceptability of Ethereum and all applications built on the blockchain, by decision makers and regulators” , anticipates Dutch bank-insurer ING in a recent note.
Practical applications of blockchains are increasing in the banking, insurance, but also logistics or healthcare sectors. And for individuals, the prospect of paying every day with a slightly greener cryptocurrency is fast approaching.