One of the most interesting topics in crypto world these days is The Ethereum Merge. The Merge is a transition of the Ethereum network from Proof-Of-Work consensus mechanism to Proof-Of-Stake model. Switching the Ethereum network to Proof-Of-Stake consensus mechanism has been in works for a while now, and the topic had been discussed for years. The mechanisms how consensus is reached in a blockchain networks are essential to the integrity, security and functionality of these networks. While both PoW and PoS have proven to be valid solutions to decentralized system they are very different from each other.
PoW requires mining nodes and equipment to do the computations, and often require expensive and specialized equipment. While miners are not the only nodes and participants of the network, they do perform an essential role in reaching the consensus. PoW was first successfully implemented in Bitcoin network, and to this day has been working without any issues. PoW miners are also known to consume large amounts of electricity, hence making the mining activities very costly and requiring big investment.
Proof-Of-Stake consensus mechanism removes the need to expensive computation to reach the consensus. Instead participants of the network stake their coins in the network, and are chosen to verify and validate transactions. In PoS Ethereum anybody can become a validator by staking minimum of 32 ETH, and earn rewards based on their stakes. PoS, while removing a need for consuming a lot of electricity to make the network running, it also makes the network transactions faster and cheaper.
I do not have strong preference for either of the consensus mechanisms. I believe both are solutions. But are solutions for different problems. I think PoW is a perfect fit for what Bitcoin network has been trying to solve. However, PoS might be a better solution for what Ethereum does. Bitcoin and Ethereum are not in competition with each other. They both are needed solutions to very different problems. While Bitcoin is a solution to money and financial systems, Ethereum provides layer 1 smart contracts for various different kinds of applications. The world is not only about money.
I also believe, Ethereum's transition to PoS will be a win for Bitcoin. Because the second largest blockchain network stops utilizing PoW, Bitcoin will continue doing what it was designed to do without any need to change core protocol. The Merge reminds of the times when split in Bitcoin network happened and Bitcoin Cash was created. Those were also interesting times in crypto world. These events demonstrate decentralization in action. They also create financial opportunities for those who were involved or invested. When Bitcoin fork happened, those who had bitcoins ended up with same amounts of bitcoin cash. Things were confusing, many expressed opposing opinions. Today we know that both bitcoin and bitcoin cash continues to exist alongside just fine.
Now question is, considering transitioning from one consensus mechanism to another is a big change for a network, doesn't it also create an opportunity for a split of the network. In other words, would this Merge lead to another split within the Ethereum network, one that continues with PoW algorithm and another embraces PoS model? It seems like majority within Ethereum community prefer PoS, and it mostly will become the continuation of the original network. But there are also those who wouldn't mind to continue PoW system as well. Most likely proponents of continuing PoW chain are the miners and how are invested in miners. They already have the infrastructure and know-how about mining. Just like BCH didn't really hurt BTC, continuation of PoW Ethereum with a creation of a new coin shouldn't hurt the main Ethereum network.
It is not the first time that Ethereum network faced such situation where chain was forked into two, and two coins emerged, ETH and ETC. Ethereum Classic may be a lot smaller network than Ethereum, but it still has value today and its market cap is in billions. During last Bitcoin conference in Miami, the CEO of mining company Hive Blockchain Technologies shared an interesting fact, that the company also mines Ethereum Classic and all the profits they make from mining ETC cover their electricity costs. With that statement the CEO kind of admitted that they don't have interest in holding ETC long term, but it does provide a financial value that covers their business expenses.
Miners are powerful entities within networks. If for some reason a new split of the Ethereum doesn't happen, it will seem like a missed opportunity for them, and I doubt they like to miss such opportunities. Great thing about these forks and transitions is they serve as experiments in shaping the future of the internet, digital systems. I know these experiments involve financial risks and involve a lot of money. Since these systems are still new with what blockchain is trying to achieve, perhaps we don't have a full understanding of what works better yet. What if in years or decades from now we find out switch to PoS was not a good idea. It is highly unlikely. But we don't know for sure. For this reason, why not actually have two Ethereum networks, one on PoS and another on PoW with the full support of the network. What would the network participants have to lose? As things progress participants, developers, and investors can decide to remain with one network or the other, or both.
In December 2020, Beacon Chain consensus layer was launched and it runs parallel to the mainnet. When the Merge happens Beacon Chain will be adopted as PoS consensus layer with mainnet as an execution layer. After the merge consensus will be reached using PoS mechanism, and there will no longer be a need for miners. Ethereum continues to innovate and probably surprise us with new amazing things in the future. It has definitely inspired many. Hopefully, with these new changes it will be able to offer faster and cheaper solutions for developers and participants of its network.
It is a known fact that Ethereum transaction fees are not cheap. While at times it may be frustrating, it didn't stop developers building new apps and platforms. These fees didn't stop people from participating in the network. The most annoying experience for me using Ethereum was paying the gas fees even when transactions failed. This I never understood why. Mabye with PoS, problems like this will also be resolved. I don't know a lot about Ethereum and never been an active user. But I do hold some as a small investment. I wish all Ether People success! What are your thoughts about the Merge? Let me know in the comments.
Posted Using LeoFinance Beta
merge will have a big impact on gpu miners so after merge at least 95 percent of the gpu mining revenue will disappear so gpu mining will be unprofitable again unless some gpu mineable coin replace it which is unlikely to happen in the near future . Projects which choose to build on eth network they use eth becaue of the network security if i'm not mistaken so if after merge eth network can keep it's reliability then it will keep growing in the long term . i myself think that eth will dump 50% in a year because of the economical reasons even merge happens succesfully i don't think it will have big impact on the price
PoS is fundamentally less secure than PoW. One of my earliest Hive posts deals with this issue in great detail.
The short summary is that large, financially powerful actors, particularly nation states (which can print money at will), can attack and destroy PoS blockchains (by buying stake) but cannot do the same to a large PoW blockchain like Bitcoin or (currently) Ethereum.
This is because the capacity of existing deployed mining hardware is far greater (many years production) than production capacity of new mining hardware. Thus even the most powerful nation states cannot produce enough mining hardware quickly and secretly enough to be able to attack Bitcoin. Also the diversion of electrical capacity would strain most nation's electrical networks.
PoS is great for a blockchain like Hive that is not primarily focussed on the security of money but on content and DApps.
For Ethereum, for which security of the financial function is critical, the change to PoS is a bad idea. They are trying to be everything to everyone and this is a mistake.
For security of money Bitcoin's PoW mechanism is the absolute best and it will benefit as Ethereum dilutes its security.
I think the timing for merge is perfect. With energy problems around the world is the only way to lead and innovate. And of course to not be blocked by governments bc your dirty energy consumption. Do you agree on that aspect?
The reality is kinda the opposite than you described in your comment. After the merge ETH will be much MUCH easier to censor, control or even shut down. Because vast majority of stacking is done through Kraken, Coinbase, Binance and other centralized entities. OFAC had to just snap it's fingers and Tornado Cash and all accounts associated to it got rekt. What do you think would happen when 70% of validating is done through above mentioned entities located in USA?..
There are no energy problems in the world. There are political problems tho. If only just Europe and USA invested same amounts in nuclear and not wind/solar...
And crypto mining (especially BTC) is actually leading the way in a lot of innovation in energy production and actually makes it viable for a lot of clean energy production.
After making this post I saw this article that suggests there might be risks or threats from regulators for Ethereum on PoS.
https://decrypt.co/107700/coinbase-ceo-wed-shut-down-ethereum-staking-if-threatened-by-regulators
When it comes to PoW, I don't think governments would ban because of energy consumption. However, they try to make it more difficult for miners sometimes. I actually see opportunities for government and private sector collaboration and cooperation to create infrastructure that can be paid by mining profits, but also be useful for communities, cities, and countries as such new infrastructure may provide electricity at lower costs.
Overall, I believe mining is more efficient way of creating value than any other ways energy is consumed.
Posted Using LeoFinance Beta
It would be interesting to know how big is Coinbase with eth staking. I would say majority and whales are staking at decentralised Aave etc. But I may be wrong.
The eth maxis are saying that the merge would be greener and then the eth would become deflationary as there would be each year less eth, not more. I think around 2% less supply each year. So this is good news for holders and stakers.
And @geekgirl thanks for your generous tip!
On recent pump I sold all of my ETH that I still had left (around 2k price). I really don't like a few things that recent events revealed. First of all if there was a chain split and miners would decide to continue mining on the old chain. Basically Circle (USDC) and Tether (USDT) decide which chain succeeds (because of their impact on the whole DEFI). It is very likely that they would go with PoS. But still... That is not what decentralization looks like. And if we do get successful merge, then we have another problem - >50% of validators are exchanges and other institutions located in USA... And they will not push back vs OFAC (as Tornado situation showed). Again... This is not what decentralization looks like. If ETH was a stock I would evaluate it differently, but now... Strong sell for me.
Definitely this can happen too, but all party involved need to understand it importance and to me that I honestly doubt
History dictates that yes their will be a fork, the miners already have a sunk cost into it and they can't just up and leave, ETH classic isn't going to cover their bills, so I think they will fork and it's going to be a shitshow if they do
Haha. That's ironic, isn't it? I agree with the fact that if fees were a problem, Hive would have replaced Ethereum long back. But guess what, it didn't. ETH has a strong dev community and that is not going anywhere.
Posted Using LeoFinance Beta
I agree the fees are irelevant. It can be seen as the premium you pay to use the best product. Like in other markets too.
And there is also L2 on eth (optimism, argentum, ...) offering fractions of costs for transactions at high speed.
Almost negligible on L2. It's crazy! Although I prefer Hive because of the better user experience. Maybe the merge will change that for ETH. In any case, L2s are there.
I love Hive too. I am emotionally attached to it (I joined Steemit in 2017). It has also a great regular user base.
But for mass adoption and integration into RL I would place my bets on ETH. They invented smart contracts, nfts, ... right? Although Hive can be an important player too. Let's wait and see.
Crypto is full of opinions that bring about a distortion of information overtime. An oportunity has presented itself and those who are capable can jump at it. On the other hand those that have the equipment feel ripped off. But this is an opportunity for all.
Stubborn greedy miners who want to keep their ROI!!! They knew this was coming. Let the technology and ecosystem evolve and thrive. Hell, I've been waiting 5.5 years for this beautiful day to come. If we get free coins from the fork I can sell quickly like Bitcoin/BCH, then I guess we can stomach this drama a little bit.
Miners will really have a problem, especially those who have purchased equipment recently. But I think the rest have earned enough to go smoothly into the witnesses or gradually sell the equipment.
But overall, I really hope that we will be able to appreciate all Ethereum products soon. Without the crazy gas fees.
!PIZZA
!CTP
Standard to me is doing one thing continuously if the result is satisfying and with open hands for improvement. Wanting to be like someone who is doing well than you when all facts all put together is healthy. Ethereum trying to move from PoW to PoS isn't too bad if projects built upon it remains unchanged but surly the orthodox believers would love to remain with the initial making Split an unavoidable possiblity. If decentralization remain decentralization, opinions must differ and there's a doul interest each solving problems.
History is being made, but I think it's tough to predict whether the split will occur, and if it does, will it be shortlived or hang on indefinitelt?
Because you never know how strong people will stick to their guns. Most people expected Ethereum Classic to fold and become irrelevant but it is still here. So it's possible that POW Ethereum could survive the merge similar to how HIve survived the Fork, lots of work and appealing to the principles of a critical mass of people.
Posted Using LeoFinance Beta
Really interesting!
I'm totally new to all of this and this is informative.
Emailed to a friend who has questions as well. 👍
There's definitely going to be PoW forks... The question is whether they will die out.
Posted Using LeoFinance Beta
I feel the same way, but until the gas fees go way down, I don't see myself using it. Why pay dollars to move money when you can do the same for pennies?
Ethereum is forced to switch from POW to POS, currently making smart contracts work efficiently on a POW is not possible
Ethereum if merge could bring a lot of benefits. The prices can be cheaper at last !
I think they should keep experimenting until they get cheap transactions.
Energy costs will decrease both with the technology or methods to mine, and with avances in technology for the use renewable energy.
As long as they can figure out the gas ETH will do great! I think SOL is gonna be king when its all said n done!
Nonetheless, there’s an uptick in the number of social media threads that shows miners strategy after the merge will likely switch to whatever POW chain that’s more profitable.
Gas fees have kept me from blockchains built on Ethereum. It doesn't make sense to me at all. I read a tweet from someone who said it would cost them $100 in gas fees to conduct a $75 transaction. What?! How does that even begin to make sense? I'm glad there are so many other options (like Hive) that do not follow the Ethereum model.
Miners gonna keep on mining...something.
Peradventure the merge may be a way to reduce the cost of Eth transaction fee. Sometimes merging like this do spill the beans and make it refine.
You have a brilliant point there but now it left to both parties to come together so that this can work perfectly well but then how can that be couple with the situation at hand.
It is not all about merging right now, can will just look at how it efficient this is going to be after all is in place too
At least this post is closer to being part of something Financial than your movie reviews.
PIZZA Holders sent $PIZZA tips in this post's comments:
stdd tipped geekgirl (x1)
@torran(5/10) tipped @geekgirl (x1)
Please vote for pizza.witness!
!PGM
!PIZZA
hmmmm, very interesting to see what happens now..
台灣旅遊出差旅館約妹束負any599暑假學生妹清純校花兼職空姐巨乳
秘書OL老師高挑麻豆蘿莉小可愛優質正妹遊戲直播主網紅國光氣質女神
#淡江學姐 #台大學妹 #輔仁校花 #逢甲學生妹 #靜怡學妹 #東海校花
#樹德學生妹 #東吳大學學姐 #台南叫小姐外約 #無套NS一夜情約炮
#台北外送茶新北叫小姐 #台中喝茶外約小姐火辣性感本土空姐模特
小錦外送茶籟xy366加入密我唷~莉塔外送茶海盜外送茶小蜜蜂外送茶
#彰化員林南投草屯出差約炮#高雄外送正妹【Telegram：@gg9875】
#汽旅商旅出差住宿喝茶找小姐約炮優質正妹官網：www.kin6767.com
Posted Using LeoFinance Beta
台灣旅遊出差旅館約妹束負any599暑假學生妹清純校花兼職空姐巨乳
秘書OL老師高挑麻豆蘿莉小可愛優質正妹遊戲直播主網紅國光氣質女神
#淡江學姐 #台大學妹 #輔仁校花 #逢甲學生妹 #靜怡學妹 #東海校花
#樹德學生妹 #東吳大學學姐 #台南叫小姐外約 #無套NS一夜情約炮
#台北外送茶新北叫小姐 #台中喝茶外約小姐火辣性感本土空姐模特
小錦外送茶籟xy366加入密我唷~莉塔外送茶海盜外送茶小蜜蜂外送茶
#彰化員林南投草屯出差約炮#高雄外送正妹【Telegram：@gg9875】
#汽旅商旅出差住宿喝茶找小姐約炮優質正妹官網：www.kin6767.com
Posted Using LeoFinance Beta