Over a decade ago, you may remember the whole world was worried about one particular day or event dubbed Y2K. Now, we are on the verge of a very similar moment, but in the fascinating crypto industry looking at Ethereum’s network upgrade known as the Merge. The event is labelled a seamless transition that should not cause any noticeable change for the blockchain user, the most famous and widely commercially used blockchain. As always, some cynical people in the industry believe that the event could kill Ethereum if things do not go according to plan. The event is taking place this week, and the whole crypto industry is on its toes to see the outcome of this event.
One thing which is pretty straightforward when it comes to the crypto industry is that there is no such thing that is smooth; the upgrade is going to be a beginning of a new bumpy ride and is likely to bring more wild swings for traders and investors. Many leading industry players are taking the utmost protection during the event as they do not want to repeat what happened in 2016 when hackers stole more than 40K Ethereum Classic coins from the Yunbi exchange. This time, however, companies like FTX and Coinbase have already informed their users that they will not be allowing any deposits and withdrawals during the event. The idea and practice are also expected to be followed by decentralised exchanges such as Uniswap.
Ethereum is in the process of switching from a proof-of-work system to a proof-of-stake system. In the proof-of-work system, networks of computers known as miners pull transactions out of a data pool and organise them into blocks, which are then added to the blockchain. The miners are being terminated as part of the strategy to cut down on the amount of energy used. After the update, a participant in the new proof-of-stake system that will be known as a builder will be newly established. This participant’s job will be to collect transactions into blocks, which it will then deliver to validators. The validators will provide their stamps of approval on the sequence of blocks that will comprise the improved blockchain.