A bit of good news would be great. It received some on Wednesday.
The software architecture of the platform appears to have been upgraded from a type ofBlockchain known as Proof of Work to a type ofBlockchain known as Proof of Stake.
This upgrade, which came to be called, simply, "the merge," is already being heralded as a landmark moment in the history of cryptanalysis
As the first proof-of-stake transactions were verified, dozens of developers gathered on a conference call to celebrate.
Vitalik Buterin told the group that the first step was towards being a mature system. The merge symbolizes the difference between the two.
A string of major scam and hacks, a new wave of regulatory scrutiny, and trillions of dollars in losses have caused a lot of angst for the community.
I don't know if it will. Let's take a look at some of the reasons that people are celebrating.
It wasn't certain that the merger would work. It is terrifyingly complex to switch a consensus mechanism in a distributed ledger system. It has been compared to swapping out a spaceship's engine mid flight. It took years of testing and research, as well as many delays, for developers to be confident enough to attempt such a maneuver. If the merger hadn't gone according to plan, hundreds of billions of dollars' worth of transactions would have been irreparably broken.
There could be something breaking in the next few days. The merger seems to have gone as smoothly as possible.
There are two reasons why people are happy about the merger, the first one is that the new ether is more eco-friendly than the old one. The network of computers that competed against each other to solve the puzzles burned a lot of energy. It will be secured by a process known as "staking," in which investors agree to deposit their coins in a shared pool in exchange for financial rewards.
The environmental footprint is the big, immediate improvement, but there are other benefits to the merger. The newEthereum will consume less energy than the old one. It is similar to the entire nation of Portugal going off the grid. Industry advocates should use it to make the case for green.
Many people think that the merger will benefit the value of ether. For reasons that are too complex to get into here, it is necessary to destroy billions of dollars' worth of ether every year. It won't need to create a lot of newEther to pay out rewards. The value of existing coins will increase if the overall supply of ether shrinks. Under the old proof-of-work system, miners were forced to sell some of their ether to pay their electricity bills, but this will no longer be the case.
I have talked to a number of leaders in the industry and they all feel cautiously optimistic about the merger. They hope that at least some skeptics will come around now that the enormous environmental toll has been taken out of the equation with the emergence of ether. Companies that experiment with NFTs and other Ethereum-based technologies won't face a lot of backlash because regulators won't object to the new version of the software.
I don't think the merger will solve the problems in a day or two.
I don't know if it's clear that the biggest obstacle to mainstream criptoadoption is energy use. A lot of people who are opposed to coin on principle cite environmental concerns as the reason for their opposition. A lot of people are skeptical ofcryptocurrencies because they don't have anything to do with energy. Maybe they know someone who lost a lot of money on Doge coin. They may have been scared by the stories of hacks and scam. They may be put off by the lack of obvious uses for it. Maybe they are opposed to a new form of money that doesn't have the government's support.
The people in charge of regulating the industry in the US seem to want to ban it. Regulators are concerned about stable coins, Ponzi schemes, state-sponsored attacks on computers and investors losing their money.
None of that is addressed by the merge. You might be able to change the minds of some politicians by telling them that ethereum uses less energy, but I don't think that will change their minds. Gary Gensler, the head of the Securities and Exchange Commission, wrote an opinion piece for The Wall Street Journal last month that didn't mention environmental concerns at all.
Tensions within the community could be caused by the merger. There are some people who think that the switch to a proof-of-stake algorithm for ether was a calculated ploy to make it look better than it really is. The energy consumption ofBitcoin is likely to stay high for the foreseeable future because it has no plans to switch to a new consensus mechanism.
Because it is secured by investors, rather than by networks of puzzle-solving computers, the new ether could make it easier for governments to crack. Brian Armstrong, the chief executive of the company, has already said that he will shut down the business if there is a government request to censor it.
Money-losing investors in failed projects like Luna and Celsius Network won't be helped by the merger.
The merger was a technological marvel and a testament to the power of open-source development. The developers who spent years making it work should be proud of how smooth it was.
A successful merger won't be enough to turn around the fortunes of the company. I'm sorry to remove the champagne's sparkler.
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