Ethereum successfully executes an impressive feat of engineering.
Ethereum has successfully transitioned from the proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS) as The Merge goes live, making the network significantly more sustainable.
Congratulations to the #Ethereum project and community on a successful Merge!
This is an enormous engineering achievement, and a historic event to celebrate.
We look forward to the many new on-chain metrics and innovations to come!
— glassnode (@glassnode) September 15, 2022
Several pundits have often described the upgrade as an impressive feat of engineering akin to swapping out a vehicle’s engine while it remains in motion. These statements are tied to the fact that the network transitioned from PoW (what some will describe as the old gas engine) to PoS (largely compared to an electric engine) without any network downtime.
6/ This challenge is best illustrated by an analogy where Ethereum can be viewed as a spaceship (providing multiple functional layers – consensus, execution, settlement, data availability) with the Beacon Chain being a newly built engine (consensus).
— GSR (@GSR_io) September 9, 2022
Notably, as highlighted by Polygon and reported by The Crypto Basic, by switching to PoS, Ethereum has cut down its energy consumption by 99.95%. Consequently, it offers added certainty to the network’s sustainability in a world that is moving increasingly toward greener energy sources to save the environment.
Ethereum founder says merge will reduce Worldwide electricity Consumption by 0.2%.
"The merge will reduce worldwide electricity consumption by 0.2%" – @drakefjustin
— vitalik.eth (@VitalikButerin) September 15, 2022
It bears mentioning that in the US and the EU, there has been pressure from some quarters to outlaw PoW digital assets, with the EU coming close to an effective Bitcoin ban in March. Notably, the energy consumption of Bitcoin and Ethereum has often been compared to that of small countries by environmentalists and politicians opposed to crypto assets.
The Ethereum upgrade puts Bitcoin in a precarious position. The leading crypto asset remains the only one running on PoW. The successful Ethereum Merge could also strengthen political pressure for Bitcoin to transition or face very restricting political conditions.
While The Merge does not cut down on gas fees or make transactions faster, it makes Ethereum deflationary by cutting down on the asset’s annual issuance and incentivizing investors to hold on to their bags with the introduction of the staking economy. Consequently, it reduces supply while demand is projected to increase, as explained by crypto pundit Lark Davis.
It is worth noting that Ethereum becoming environmentally friendly and deflationary could be the narrative that brings about the flipping. For the uninitiated, the flipping refers to a hypothetical future where Ethereum surpasses Bitcoin to become the number one digital asset by market cap.