Ethereum now has an official date of Merge. After months of speculation, the Ethereum Foundation — the non-profit dedicated to supporting Ethereum and related technologies — announced that the much-anticipated Merge will trigger on September 6. The actual Merge is expected to trigger between September 10 and September 20. When the Merge takes place, Ethereum will be moving from a proof-of-work (PoW) model to a proof-of-stake (PoS) system. This will lead to the creation of Ethereum 2.0, or ETH 2.0.
PoW is a crypto proof that allows one party to let others know that a certain amount of computation effort has been used, which can be verified later on with minimal effort. On the other hand, PoS is a consensus mechanism that validates block transactions based on the number of coins a validator stakes.
The Ethereum Foundation said in a blog post that the Bellatrix upgrade, which will begin the final countdown of the Merge, has been scheduled to activate on September 6 at 11:34am UTC (5:04pm IST).
Ethereum Merge: What will it bring to the table?
So, why was the Merge the most-awaited event among crypto enthusiasts this year? Edul Patel, the CEO and co-founder of crypto exchange Mudrex, told ABP Live, “The upgrade is crucial as it cuts down over 99 percent of energy consumption which can take it away from the radar of governments trying to impose duties on energy-intensive mining.”
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Crypto platform Unocoin CEO and co-founder Sathvik Vishwanathan calls the Merge a “progressive step.” He told ABP Live, “As a decentralised maximallist, I believe this to be a progressive step towards making crypto and decentralization globally acceptable, and creating and managing makes it easier for backward countries with limited power supply.”
As per Ujjawal K. Panchal, co-founder and CTO of social networking app Memechat told ABP Live, “When the Ethereum Merge is implemented, it will move to PoS and allow great scalability and cheaper costs. This will be attracting more users.”
“Currently, ETH chains or ETH-based chains have very wide adoption in the Web3 market. Increased stakes and interest may lead to additional funding for blockchain research and more innovative ventures,” Panchal added.
"The Merge will have a significant impact on the entire cryptocurrency community. It outperforms the 2016 ETH split in terms of scalability and introduces new proof-of-stake, energy-efficiency, and cost-reduction opportunities," said Dileep Seinberg, the founder and CEO of bill payment and utility crypto platform MuffinPay. "However, this will not impact gas fees as many might be anticipating."
"There would be no direct fiscal impact on investors' taxes. This is a technological upgrade rather than a financial one. However, if the price of Ethereum rises, the investor's tax liability will be adjusted based on the gains they accrue. The tax implications will remain minimal or muted if the token's price does not change significantly," Seinberg told ABP Live.
Ethereum Merge: How is PoS better than PoW?
In PoS, processing doesn’t use up much energy, transactions are comparatively cheaper, and lastly, it is safe from a major attack on the network, as the compensation structure is designed in a way that renders an attack less advantageous.
In PoS, users have to offer, or stake, their own coins as collateral in order to validate their blocks. Users who stake coins are called validators. These validators are chosen at random to validate the block, or ‘mine’. This reduces competition among stakeholders.
While earlier reports suggested that you would need to stake 32 Ethereum coins to run a node (sync their own self-verified copy of ETH), the Ethereum network on its official site clarified that “no ETH is required. Not before the Merge, not after the Merge. Not ever.”
The site also said that the Merge will not reduce gas fees as the Merge is “an expansion of network capacity, and will not result in lower gas fees.”
For those unaware, a gas fee is the maximum amount of energy a user has agreed to pay in order to complete a crypto transaction on a blockchain.
Ethereum price rally
The news of the Merge has been pushing ETH prices through the roof over the last few weeks, making the crypto nearly touch the $1,900 mark last week. At the time of writing, Ethereum price stood at $1,702.68, seeing a gain of 3.91 percent in the last 24 hours, as per CoinMarketCap data.
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