Ethereum Merge Tentatively Set For September 19: What Does It Mean? Will It Affect Funds In Your Wallet?
Ethereum will be moving from a proof-of-work (PoW) model to a proof-of-stake (PoS) system.
Ethereum Mainnet is expected to undergo its much-awaited ‘Merge’ on September 19. During a conference call between Ethereum (ETH) devs, core developer Tim Beiko proposed a tentative date of September 19 for the Merge. Since the date didn’t invite any objection from other core devs, it can be expected that the Merge will indeed be taking place on the aforementioned date, if all goes well. So, what is the ETH Merge? What difference will it make? Will it affect the funds already present in your wallets? Do you need to do anything from your end? Here’s everything that you need to know.
Ethereum Merge: What is it?
With the Merge, 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.
ETH’s transition began in December 2020 with the launch of Beacon Chain, which is a digital ledge of accounts that conducts and coordinates the network of stakers.
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 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 Merge: Will it affect your funds?
No, the Merge will not affect your already accumulated funds in any manner. The Ethereum network said on its website, “As a user or holder of ETH or any other digital asset on Ethereum, as well as non-node-operating stakers, you do not need to do anything with your funds or wallet before the Merge.”
The entire history of ETH will remain intact and unaltered after the transition. So funds in your wallet will remain accessible and “no action is required to upgrade on your part.”
Ethereum Merge: Word of caution
While users won’t need to do anything to upgrade, it is still advisable that they should be wary of scams trying to take advantage during the transition.
“Do not send your ETH anywhere in an attempt to "upgrade to ETH2." There is no "ETH2" token, and there is nothing more you need to do for your funds to remain safe,” the network advises.
Ethereum Merge: What happens after?
It is largely believed that the switch to PoS will help make Ethereum more sustainable and eco-friendly. The network said on its site, “This will also set the stage for further scalability upgrades not possible under proof-of-work, bringing Ethereum one step closer to achieving the full scale, security, and sustainability outlined in its Ethereum vision.”
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.
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