Home Ethereum Ethereum moves closer to resolving major criticism and beats Bitcoin

Ethereum moves closer to resolving major criticism and beats Bitcoin

Ethereum moves closer to resolving major criticism and beats Bitcoin

A behind-the-scenes change to the technology underlying many cryptocurrencies, including Ether, is one step closer to addressing a major source of criticism: the environmental impact of crypto.

For years, cryptocurrencies like Bitcoin and Ether were assaulted for the large amount of pollution that comes from the electricity generation used to operate them. Due to the huge costs involved, miners often settle where energy is cheap, usually because it comes from sources like coal.

But that could soon come to an end with the latest changes to a key blockchain, used to power the cryptocurrency Ether, several rival cryptocurrencies, and projects based on non-fungible tokens, or NFTs. The adjustment promises to reduce the energy consumption of the Ethereum blockchain 99%.

It also gives Ethereum an edge over rival Bitcoin, which hasn’t moved much towards energy efficiency. Although under pressure to gobble up less energy, Bitcoin has no plans to change its technology like Ethereum has.

The transition that is key to Ethereum’s energy savings has come one step closer to reality last week with a generally successful test that simulated the broader merging of Ethereum’s proof-of-work and proof-of-stake chains. Based in part on news of the so-called merger, the price of Ether outperformed Bitcoin in the last seven days.

Ether is up around 13% over the past week to around $3,007, while Bitcoin is up around 7% to $42,622.

The change involves the Ethereum network, which operates using something called proof-of-work. Previously, to record a transaction on its blockchain, a transparent digital ledger, miners had to use powerful computers to solve complex mathematical problems.

After the green solution, miners will eventually be able to verify transactions by staking some of their own crypto in special wallets in what is called proof-of-stake. The more cryptocurrency validators wager, the more likely they are to be able to validate the transaction and claim a crypto reward for doing so.

This process consumes less energy because it does not require the use of powerful computers to solve mathematical puzzles.

The Ethereum network is best known for its native cryptocurrency, Ether, the second most popular behind Bitcoin. This too hosts a number of popular apps such as NFT exchange OpenSea, crypto wallet MetaMask and automated token exchange UniSwap.

From now on Ethereum has two different channels, the old using Proof of Work and the new using Proof of Stake. Through a process called merging, Ethereum will combine the two chains and transition from proof-of-work to proof-of-stake, reducing its power consumption.

The merger was expected to be completed by the end of June. But now there is no exact date set, according to a blog post by the Ethereum Foundation, a non-profit organization dedicated to supporting the network.

Tim Beiko, an Ethereum developer who leads blockchain updates, Told Fortune the switch to proof of stake could take place this summer.

When the long-awaited merger happens, environmentally conscious investors may be more likely to pour money into projects that run on the Ethereum blockchain. Additionally, the tweak promises to make validating transactions cheaper, as powerful computers would no longer be needed.

Never miss a story: Follow your favorite topics and authors to receive a personalized email with the journalism that matters most to you.


Please enter your comment!
Please enter your name here