If you type “merge” into Google today, the countdown is handled: it’ll come in just over two days, as of this writing. The countdown has begun to end time until one of the biggest transformations the cryptocurrency world has ever seen.
The consolidation marks the transition of the Ethereum network from a proof of work mining system to a proof of stake. Ether is The second largest cryptocurrency By market cap, it comes behind Bitcoin. As of January, 80% of the world’s NFTs were on the Ethereum network. When people talk about Web3 applications in cryptography, they are often talking about development on the Ethereum blockchain or related protocols. This shift could significantly reduce the greenhouse gas emissions of blockchain technology, but there are some thorny problems ahead.
What is the difference between Proof of Work and Proof of Stake, climatically speaking?
The massive energy consumption of the world’s cryptocurrencies comes from a mining process known as Proof of Work, which requires significant computing power. In this proof of working system, miners use massive energy-consuming machines to race to solve an equation; Whoever solves the equation first is given the privilege to create the next block on the blockchain.
Alex de Vries, founder of Digiconomist, a website that tracks carbon emissions from cryptocurrencies, said. “The bitcoin network is currently generating 200 quintillion of these guesses every second of the day – that’s 200 with 18 zeros. What they’re doing is basically, is it 1? Is it 2? Is it 3? But they are doing it very quickly, and hopefully at some point Once they find a speed that fits the requirements, if you succeed, you are in luck: you can create the next block in the blockchain, and you will get the reward associated with it.”
Proof of Stake, meanwhile, is a lot like the lottery. Instead of powering multiple machines, miners offer some form of collateral — such as buying a lottery ticket — to enter for a chance to build the next block on the blockchain.
“As a proxy for quota, someone is chosen from a hat at random, which takes absolutely no energy,” said David Yermak, professor of finance at New York University’s Stern School of Business.
By switching to the lottery system represented by Proof of Stake, the network will no longer need energy-sucking computers that crunch equations to prove systems of work. Some estimates predict that if the merger is successfully implemented, it may be eliminated more than 99% of the network’s carbon footprint. Considering that the Ethereum network currently has a carbon footprint of FinlandThis is a very big upgrade.
What exactly will happen this week?
The leadership of the Ethereum blockchain said last week that the network will update its software between September 13-15. The update will affect what is known as ethereum difficulty – the amount of time it takes a miner to solve a problem to create a new block on the blockchain. Encoders are usually updated to ensure that problems can be resolved in a reasonable amount of time. But this week, the Ethereum network will tackle what is known as a hard currency — making it virtually impossible to mine under the legacy Proof of Work system.
“The difficulty will reach an exponentially increased level – the so-called ‘difficulty bomb’ will explode,” Yermak said. “People who do mining work, they won’t have a choice given how hard mining was under the old system. They would have to get rid of their pickaxes and shovels, stop mining the old way, and go back to the new.”
This change will, in theory, lead to a permanent new way of mining Ethereum that doesn’t use all that energy. “Basically, all the energy use will be gone,” Yermak said. “It’s very cheap to pick someone at random by running a lottery. You compare that to people doing trillions of calculations per second, running very powerful computers that consume a lot of power – the whole point is to reduce power consumption, and that will make everything disappear. “
Is everything going smoothly?
This depends on several factors. De Vries notes that the Ethereum leadership has said several times in the past that it will switch to Proof of Stake, and has not made that change. But this is as far as they have come in this process and the first time they have given such a specific date for a switch; The closer we get, the safer and more secure this assumption becomes Something It will happen this week.
Like any software change, there may be errors in the actual material of the update that can hinder the transition. But an even bigger problem can come from miners who decide not to cooperate with the new way of working. The proof-of-work method means that Ethereum miners, like all crypto miners, have spent a lot of money investing in physical processors to solve equations — an investment they would hate to give up with the switch to Proof of Stake.
Miners can Create what is known as a fork, or split away from the main blockchain to create a separate version of the network. Both the Bitcoin and Ethereum networks have already encountered forks that create different versions of the coin, known as Bitcoin Cash and Ethereum Classic. If enough Ether miners commit to proof-of-work, it can keep many of the machines that were supposed to shut down after the merger are still active and generating emissions.
One team of these miners say they have Already dismantling the bomb difficult And ready to hitEat a hard fork. if tMiners keep their machines working Proof of working mining, just on a different Ethereum fork — or simply by switching to mining other cryptocurrencies — could mean that many power-hungry miners stay online, running and consuming power, even as the rest of the network moves.
“The miners have every reason to try,” de Vries said. “They will lose all their income, so why not give it a try?”
If the merger goes well, are all the environmental issues with cryptocurrency fixed?
not exactly. For starters, defining Ethereum emissions ignores the real crypto elephant in the room: Bitcoin. Even after the crypto crash earlier this year, the Bitcoin network is still there emits as much as possible 71.5 megatons of CO2 per year, dwarfing Ethereum 46.8 megatons.
De Vries said there is a chance that a successful Ethereum move to proof-of-stake could trigger a similar operation to Bitcoin, especially given the recent attempt by him. European Union Parliament and the leadership of some countries To ban dirty mining. “I fully expect that, at least in Europe, a proof-of-work ban will soon be back on the table,” he said.
But he throws you skeptical. He noted that, unlike Ethereum, which has a central leadership and known public figures to help encourage a massive transition like Merge, the Bitcoin network operates in a more decentralized manner: its founder is famously anonymous, and any proof-of-stake swaps would have to persuade the operators of thousands of Bitcoin “nodes” to make Change.
There was a political dimension to [Ethereum] Going green and that wasn’t an issue with the people who put bitcoin out there.” “There will be an imagination on the part of environmentalists like, OK, now bitcoin can change, but it’s a very difficult governance problem.”
If the Bitcoin network eventually transforms, that will be huge for crypto emissions – but still not a panacea. Cryptocurrency, as De Vries points out, is in essence created to provide stability through a decentralized network — the more devices there are on it, whether it’s Proof of Stake or Proof of Work, the more secure that network is. This is the opposite of what is needed as the world changes its systems to combat climate change.
“From a blockchain perspective, you always want more machines, but from a climate and efficiency perspective, less is more,” he said. “The thing is, if you add proof of work on top of it, you can make things 10,000 times worse. I wouldn’t say moving to proof-of-stake completely solves all crypto-related sustainability challenges — I always tell people, if we don’t have proof of work and we have proof of Stake today, we might be very frustrated about how much inefficiency it presents. But now we have the Proof of Work blockchain that makes really good Proof of Stake.”
However, de Vries said, any switch to Proof of Stake is welcome before these other issues are discussed. “Let’s first fix the bulk of the problem.”