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Ethereum, the most traded cryptocurrency after Bitcoin, promises to be much more sober in its electricity consumption. Once it completes the merge with a new validation system.
The crypto community has been waiting for this moment for months, if not years. Because the founder of Ethereum started talking about it in 2016! Excessive electricity consumption is one of the Achilles heels of cryptocurrencies. Validating a transaction with blockchain technology requires the participation of thousands of power-hungry computers. If Bitcoin were a State, it would be in the top 35 of the most energy-intensive. Ethereum is a notch below, with consumption equivalent to that of Finland. At a time when the planet is going through a mega energy crisis, the announced merger could be the kick-off for the decarbonization of cryptocurrencies.
What is this merger about?
The merger of Ethereum with the beacon chain is a computer process that will upset the operation, and even the philosophy of cryptocurrency. It’s like a PC upgrading to a new operating system. Transactions will no longer be guaranteed by the blockchain, which is far too energy-intensive, but by Ethereum holders. They will have to declare their wallet and they will be paid for their contribution. The merger operation is in progress, it will be finalized by Thursday at the latest; according to some experts it could even be completed today. But beware of the bug: carrying out this merger is like changing the engine of a plane in mid-flight, explains an expert, a high-risk process. To become greener, the cryptocurrency will first have to pass this full-scale crash test.
What will be the consequences of this change?
A priori there will be none in the daily use of Ethereum. This is not the expected revolution in the virtual wallet. This currency will remain a little too expensive in the eyes of users, because Ethereum, very widespread in the web3, for NFT exchanges for example, requires fees much higher than those of competitors. And the validation process, which is very slow today, will remain so. By becoming greener, a criterion that is becoming essential in finance, the encrypted currency hopes above all to convince that it is now more attractive than Bitcoin. That it is the cryptocurrency of the future.
This merger also has implications, the effects of which are still difficult to measure.
Ethereum renounces the main principles common to all cryptos: with the blockchain, it is the computers that do the validation work, there is no third party intervention. While in the new Ether system, this essential mission will be accomplished by the holders of currency. The bad guys could manipulate the currency. Whoever owns 51% of the Ethereums in circulation will be all-powerful. We are at the antipodes of the Bitcoin philosophy. Given that the three main crypto exchanges probably own more than half of Ethereum between them, drifts are in theory already possible. Just as big bitcoin investors are suspected of fueling volatility in the currency. Virtual currencies are therefore far from keeping their promises but they continue to fascinate. This summer, Bitcoin, 40% of the crypto in circulation, rebounded strongly, it is now back above the $22,000 mark. Ether, which represents 20% of cryptos, has also regained momentum, it is worth around 1,700 dollars.