The Ethereum network, which powers the second largest cryptocurrency in the world, completed a long-planned upgrade known as “The Merge” early Thursday, moving from a proof-of-work system to a proof of stake system. And nothing catastrophic has happened yet, despite plenty of dark predictions by an army of short-sellers.
“And we finalised! Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today,” Ethereum co-founder Vitalik Buterin tweeted early Thursday.
Ethereum’s original proof-of-work system required computers to play a guessing game to validate transactions on the network (sometimes misleadingly described as solving a “complex” maths problem), while proof-of-stake allows validation of transactions through the use of ether that’s put up for collateral through a new blockchain called Beacon Chain.
The proof-of-work system of “mining” ether was incredibly energy intensive and cryptocurrencies that allow for mining of coins have come under fire in recent years for consuming energy comparable to entire countries.The move to proof-of-stake is expected to reduce energy consumption on the Ethereum network by 99.95%, according to the Ethereum Foundation. Even if crypto is a Ponzi Scheme, and there’s evidence it really is, at least it’s a more environmentally friendly Ponzi Scheme these days.
Short sellers have been betting big against ether in recent weeks, predicting that “the Merge” will cause security problems and weaken faith in the cryptocurrency. Some in the crypto community spoke with absolute certainty that something would go wrong.
“It’s very difficult for me to see how a fully functioning platform with a market cap of around $US200 ($278) billion can essentially change the engines out in flight and not have some sort of security issue in all that complexity,” Christopher Calicott, a crypto investor at Trammell Ventures, told the Wall Street Journal on the eve of the merge.
One important corollary of this is better EIP 1559 performance (because fewer blocks bump up against the 2x limit). So far, the percentage of full blocks has dropped from ~20% to ~10%.https://t.co/qmCkqzYn2z https://t.co/8ZzlPunGEZ
— vitalik.eth (@VitalikButerin) September 15, 2022
The Ethereum Foundation offered a $US1 ($1.49) million bounty for any bugs that could be found between August 24 until September 8 before the Merge. The top bounty for “critical” bugs has returned to $US250,000 ($347,050).
But there aren’t any signs of anything terrible happening under the hood, at least not yet. There’s still plenty of time for hackers to find weaknesses to exploit, provided they exist. Hackers have previously exploited bugs to steal crypto, including roughly $US625 ($933) million worth of cryptocurrency from the Ronin blockchain back in March that the FBI says was carried out by North Korea.
Ethereum is currently trading at $AU2,215, largely unchanged from 24 hours earlier but still down 8.72%. And if everything keeps going to plan, ether short sellers could be in for quite the short squeeze.
Bitcoin, the largest cryptocurrency in the world, is currently trading at $AU29,566, down 1.30% from 24 hours earlier.