Ethereum officially adopted proof of stake in the early hours of Thursday. The blockchain Ethereum has transitioned to a more efficient method of verifying transactions after years of effort. This transition is marked in the history of the crypto industry as one of the biggest software upgrades. The Merge began at 6:43 UTC and was officially declared successful.
Effects of Ethereum’s Merge on the Cryptocurrency Industry
The transition from proof-of-work to Proof-of-stake will bring more security and scalability to the Ethereum Blockchain. It’ll also reduce the Ethereum network’s energy usage by 99.95%. The Merge is laying the groundwork for executing upcoming updates on the Ethereum Network.
Let’s take a look at how Merge is going to impact the crypto industry.
Staking Opportunities
Staking will continue to rise, even more after the Merge. The number of users who have already staked ether on the Eth2 blockchain even before Ethereum’s transition is very high, and the value of ETH staked by users is very high. This staked ETH is locked in a contract and will be available to withdraw after another significant update, the Shanghai upgrade following the merge.
It means the unstaking will take place approximately 6 to 12 months post-merge, and during this period, the staked ETH will remain locked with the network. The staking is an attractive opportunity to provide access to more users/investors to stake their ETH.
Enhanced security
The PoS system of the Ethereum network intensifies decentralization. With that, the chances of an attack by hackers on the Ethereum blockchain will decrease. One of the research experts on Ethereum has claimed, “the Merge will increase the security of Ethereum. A hacker needs 51% of the blockchain’s value to get into the network. With proof-of-work, the value stands at $5 billion to plan an attack, but with proof-of-stake, the value stands at $20 billion and counting. And even if we suffer a 51% attack, we can identify the attacker and remove it from the system. If they want to try it again, they have to rebuy the network”.
Impact on Institutions
Many institutions have started investing their money in the web3 ecosystem. With the Merge, more investors/institutions may develop their interest in the network. Ether will become an attractive asset to hold and stake.
Impact on Environment
With the shift to the PoS system, energy consumption will be reduced by 99.95% due to the removal of PoW processors by lightweight servers of the PoS system. The merge is going to make the network energy efficient. With a reduced carbon footprint, the merger will be eco-friendly and likely to attract more investors.
Wrapping up
The Merge is a major upgrade in making Ethereum’s network stronger. It is just the beginning, and many planned upgrades will come following the merge according to Ethereum’s framework. Ethereum will continue to grow for years due to continuous development and strong institutional support.
