As the Ethereum Merge Complete, We Torchlight What it means for African Users

As the Ethereum Merge Complete, We Torchlight What it means for African Users

The Ethereum Blockchain, the second-largest cryptocurrency behind bitcoin, is set to start undergoing a significant update. Known as the “merge,” Ethereum is converting to proof of stake, a more energy-efficient technique of authenticating platform transactions.

According to Greg King, founder and CEO of Osprey Funds, the update is comparable to how the switch from dial-up modems to fiber-optics allowed for a greater variety of uses for the internet, including video, online storage, and music streaming.

The Blockchain will switch from a proof-of-work (PoW) paradigm to a proof-of-stake (PoS) one after the merge. Both of these algorithms are employed to enable users to add fresh cryptocurrency transactions and maintain a record of them on a Blockchain network.

The merge represents Ethereum’s widely reported transition to proof of stake. The cryptocurrency network now employs the same proof-of-work consensus network as Bitcoin. To execute new transactions on the network, a very energy-intensive method of network security consumes enormous amounts of electricity (more than whole nations).

However, proof of stake is distinct. It is necessary to use validators rather than miners. Anyone who has at least 32 ETH available to “stake,” or pledge to the network, is eligible to become a validator. Through staking pools or cryptocurrency exchanges, users can even participate with smaller amounts of ETH. The day that Ethereum switches to that consensus method is today.

The Ethereum Foundation says that this method of operation will increase the network’s energy efficiency by more than 99%, which is a solution to the energy consumption of proof of work. However, today’s update does not address additional issues with Ethereum’s capacity and throughput.

What the Ethereum Merge Means for Investors

Investors might reap rewards in the future even though the Ethereum merge isn’t anticipated to immediately speed up the network or reduce transaction prices. Although no outcome is definite, King thinks that in the long run, the merge may benefit cryptocurrency investors since it will establish the foundation for future improvements in speed, costs, and ecosystem development.

This upgrade will alter Ethereum’s monetary policy. However, there is a widespread belief that ETH, the native coin of the Blockchain, will experience deflation; this is untrue. The switch to proof of stake will make the coin more susceptible to deflation. This is due to the fact that less cryptocurrency will now be given as rewards to individuals who maintain network security.

The entire number of miners receive 13,000 Ethereum every day with proof of work. The Ethereum Foundation has stated that when Ethereum switches to proof of stake, that number will be decreased by 90%. As a result, each staker will receive a daily payout of 1,600 Ethereum.

So after all this, what does this mean for someone holding some Ethereum on an exchange? Some experts claim that the integration shouldn’t have any impact at all. According to Ethereum core developer Danno Ferrin, “the merge implies almost nothing to ordinary consumers.” Micah Zoltu, a software engineer concurred. If everything goes as planned, the merger “should be a nothingburger,” he remarked.

 

Author

  • Storyteller and Data analyst. Passionate about startups and innovators leveraging tech to promote financial and social inclusion in Africa and for Africans

Joel Nwankwo

Storyteller and Data analyst. Passionate about startups and innovators leveraging tech to promote financial and social inclusion in Africa and for Africans

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