The Concept of Ethereum Merge

Quecko Inc
3 min readAug 26, 2022

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Ethereum, the blockchain that enabled the rise of non-fungible tokens, is about to launch one of the most exciting experiments in the crypto world.

The Ethereum network is planning to switch from an energy-intensive proof-of-work consensus mechanism to a more sustainable proof-of-stake system. This is the Ethereum merge that is going to take place with the goal of reducing energy consumption.

Announcing the date, Ethereum co-founder Vitalik Buterin said via Twitter that the Merge would likely occur around Sept. 15. Christine Kim, who is a crypto researcher at the firm Galaxy Digital, calls it the “most long-awaited upgrade in Ethereum’s history,” which was promised to users before the blockchain even launched in 2015 and will result in the creation of newer version, i.e., Ethereum 2.0

What Actually is Going to Happen?

“The Merge” is a term, a crypto slang, that’s used to describe the transition of Ethereum from a proof-of-work consensus algorithm to that of proof-of-stake.

The Ethereum Foundation provided an exact definition of this term:

“The Merge represents the joining of the existing execution layer of Ethereum (the mainnet we use today) with its new proof-of-stake consensus layer — the Beacon Chain.”

The Beacon Chain is the cornerstone of Ethereum 2.0’s architecture. It exists as a separate blockchain to Ethereum’s network.

The Beacon Chain is secured by a proof-of-stake consensus algorithm, unlike Ethereum’s mainnet, which still runs on proof-of-work.

The Merge will actually show the moment where the two systems, Ethereum’s current mainnet running on PoW and the Beacon Chain running on PoS, will come together. It will permanently replace the Proof-of-work consensus algorithm with proof-of-stake.

So, what is Proof-of-Work?

Proof of work is the original blockchain consensus mechanism. Under that system, pioneered by bitcoin and currently used by Ethereum, cryptocurrencies are “mined” by computers competing with one another to solve complex algorithmic problems.

It makes the act of mining and validating transactions on the blockchain energy-intensive, preventing some investors from putting their money into crypto.

And What is Proof-of-Stake?

On the other hand, Proof of stake records transactions without using electricity or other natural economic resources. Instead, users who validate transactions, called validators, stake Ether in order to record new transaction data on the blockchain.

“In proof of work, you have to run this computation to get payments out of that role,” says Joshua Gans, an economist at the University of Toronto. “In proof of stake, it’s more like you’re buying lottery tickets.” And elaborates further that the more lottery tickets a user buy, the greater chance of winning and earning newly minted ETH.

The Core Benefit is the Reduction in Energy Consumption

The chief element Ethereum merge estimates provides is that its energy consumption will drop by more than 99.95%. It also claims the Merge will lead to better scalability.

Co-founder of Ethereum (ETH), Vitalik Buterin, commented in a press release: “After the Merge, Ethereum will be 55% complete, there’s so much to be done in the coming years, and that’s where an opportunity for Web 3.0 builders & enthusiasts comes in.”

Summing up

All we can say is that the Merge is undoubtedly, one of the most notable moments in the history of cryptocurrencies as one of the most extensive protocols will go through a monumental change.

Let’s wait, see, and hope for the best as the process continues to go on.