The 'crypto' market faces its litmus test with the merger of ethereum

pixabay

The 'blockchain' platform, one of the most popular along with the one that supports bitcoin, adopts a new protocol in which 'miners' will not be needed

AC Madrid

The crypto asset market is about to experience a historic moment. Ethereum, the platform that supports ether (the second most popular virtual currency, only behind bitcoin), will start between Thursday and Friday the so-called 'The Merge', a kind of fusion -or rather mutation- that will consist of updating the network through technological improvements.

The date is marked in red on the market calendar, since the operation will incorporate important developments in the sector. To begin with, the success of the protocol change will demonstrate (or not, if it fails) the ability of developers to implement this new technology in a network that not only supports Ethereum, but a good part of other processes linked to the 'blockchain', such as NFTs (non-fungible tokens).

In technical terms, the change will consist of an update that transforms the platform from its computational power rewards model or proof of work (Proof of Work) to another of proof of participation (Proof of Stake), considering that the latter is more efficient and requires less energy consumption to verify transactions on the network. Among other things, because the figure of the 'miner' disappears.

It must be remembered that the ethereum network has a carbon footprint of 30 million tons per year, given the intensive use of computers to develop this mining process. As of the change, the 'miners' will become validators. That is, they will not compete with each other (as miners do) to create and confirm blocks, but rather they will be chosen randomly, changing the rewards and the ability to do business, as their participation in the process is mandatory and they may even lose. their cryptocurrencies.

Javier Molina, senior market analyst for the multi-asset investment platform eToro, recalls that "this does not imply any significant change at the user level." “On the supply side of ether, this represents a reduction of close to 80% by distributing fewer compensatory tokens,” he indicates.

Source link