Ethereum has completed its long-awaited “Merge” to a much more energy-efficient method of minting new coins, cryptocurrency co-founder Vitalik Buterin has said. tweeted. Ether coins will no longer be minted using “proof of work” that uses powerful computers to solve cryptographic tasks. Instead, they will be created using “proof of stake” methods that require users called validators to stake coins for a chance to approve transactions and earn a small reward.
Until today, the mining of Ethereum has required powerful banks of computers to solve difficult mathematical problems. That not only consumed huge amounts of power, but made Ethereum difficult to scale and expensive for small transactions. It also concentrated power in the hands of a few, something that is anathema to the decentralized spirit of cryptocurrencies.
With the new system, the more a validator bets, the greater the chance of winning a reward. But everyone gets at least something, since all ether staked earns interest (about 5.2 percent), making it more like buying a bond or putting it in a bank (apart from the wild market volatility, of course). The minimum required stake amount to be a validator is 32 Ether (about $50,000 at the moment), although people can do it pooled bet with trusted third-party validators to reach that level.
The Merge got its name because the Ethereum blockchain was combined with a parallel network that has now been running for nearly two years on a proof-of-stake basis, but it’s just one step in the transformation. “We still have to scale, we have to fix privacy. To me, Merge symbolizes the difference between early-stage Ethereum and the Ethereum we’ve always wanted,” Buterin said during a livestreamed Merge party.
Ether started the day higher but has since dropped a small percentage since yesterday. Whether Merge will make good on her promise to transform cryptocurrencies remains to be seen, as there are still plenty of questions about regulation, Ethereum forks, and more. There is also the risk of scams (as usual in cryptocurrencies), with the risk that the old chain transactions are copied to newamong others.
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