WASHINGTON – Ethereum, the blockchain that underpins the world’s second-largest crypto token ether, will soon undergo a major software upgrade that promises to slash the amount of energy needed to create new coins and carry out transactions. Here’s what you need to know about the “Merge” as the shift is known.
1. So what is the merge about?
The Ethereum blockchain is due to merge with a separate blockchain, radically changing the way it processes transactions and how new ether tokens are created.
The new system, known as “proof-of-stake”, will slash the Ethereum blockchain’s energy consumption by 99.9 per cent, developers say. Most blockchains, including bitcoin’s, devour large amounts of energy, sparking criticism from some investors and environmentalists.
The Ethereum Foundation, a prominent non-profit organisation that says it supports Ethereum, says the upgrade will pave the way for further blockchain updates that will facilitate cheaper transactions. High costs and slow transaction times are currently two of the main issues users have with the Ethereum network.
2. When’s it happening?
Very soon. The Merge is scheduled for completion between Sept 10 and 20, though the exact timing is uncertain. Independent estimates point to Sept 15 as the likely date.
Major crypto exchanges, including Coinbase Global and Binance, have said they will pause ether deposits and withdrawals during the merge. Users won’t need to do anything with their funds or digital wallets as part of the upgrade, they say.
The Merge has been delayed in the past. Most recently, ether fell some 8 per cent on April 11 after an Ethereum lead developer said plans for the event set for June had been pushed back as tests on the software continued.
3. How big of a deal is this?
Ethereum backers say the Merge is a monumental moment for the $1 trillion crypto sector. Proponents believe the Merge will make Ethereum more favourable compared to arch-rival bitcoin – the world’s top cryptocurrency – in terms of price and usability.
That could see Ethereum applications become more widely used. Investors are betting the change will be significant for the price of ether, which has gained more than 50% since the end of June, compared to a slight loss for bitcoin.