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Ethereum Blockchain Cuts Energy Use After the Major Update

  • Ethereum blockchain decreases its energy consumption with a significant technology upgrade known as the Merge
  • Ethereum has moved from the previous proof-of-work (PoW) system to a proof-of-stake (PoS) model
  • According to GlobalData, the global blockchain market is expected to grow from $5.2 billion in 2021 to $7.5 billion in 2022, a 45% growth

The Ethereum blockchain decreases energy consumption with a significant technology upgrade known as the Merge. Ethereum Merge is one of the major software updates in the cryptocurrency industry, which has generated much attention in the crypto industry since it aims to reduce energy consumption by almost 99%. It is a step toward environmentally friendly crypto technology and could soon become the standard. Ahead of the Merge, price of Ether increased by almost 65% since the end of June 2022, whereas bitcoin has barely changed.

What is the Merge

The term Merge refers to the point at which the Ethereum blockchain merges with a system called Beacon Chain. With the upgrade, Ethereum has moved from the previous proof-of-work (PoW) consensus mechanism, wherein energy-intensive computers verify transactions by solving complex math problems, to a proof-of-stake (PoS) model, wherein individuals and corporations act as validators, using their ether as collateral in an attempt to win new tokens. The new system intends to be faster, more secure, and energy efficient.

Impact of Ethereum Merge

The technology upgrade is anticipated to lessen Ethereum's environmental impact significantly. The new Proof of Stake system drastically reduces the computers required to maintain the blockchain by replacing crypto miners with a much smaller group of validators. Reducing the number of computers needed Proof of Stake also lowers the need for processing power.

In addition, the Ethereum Merge aims to increase the security of the blockchain by fixing some of the recent significant problems plaguing the network. The update will reduce the size of blocks on the blockchain, which will cut down on the amount of data that nodes need to process. As a result, the network will become more scalable, making it simpler to handle more transactions per second while keeping the same degree of security. There won't be a significant difference for Ethereum users. The new network will be an improved iteration of the existing network, with similar functionality but faster and more efficient performance.

Ethereum Blockchain

In recent years, blockchain technology-based cryptocurrencies such as Bitcoin and Ethereum gained much attention from the general public. According to GlobalData, the global blockchain market is likely to grow from $5.2 billion in 2021 to $7.5 billion in 2022, a 45% growth. Ether, the second biggest cryptocurrency by market capitalization is backed by the Ethereum blockchain. In addition to the Ethereum currency, the Ethereum blockchain supports other currencies and crypto products, including NFTs.

In decentralized finance, Ethereum has emerged as the preferred blockchain for various tasks, including smart contracts and projects incorporating tokens that represent conventional assets like stocks and bonds. Strengthening Ethereum's environmental, social, and corporate governance (ESG) credentials would benefit regulatory-driven organizations that want to start exploring the Ethereum ecosystem.

 



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