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New York, USA (CNN) – The Ethereum “merger” is giving cryptocurrency holders something to celebrate, so what’s going on?
It’s been a tough year for cryptocurrencies and their large audience. Bitcoin, by far the largest token, has dropped nearly 70% from its highest level in nearly a year. The second largest cryptocurrency, Ether, which runs on the Ethereum blockchain, has also followed suit.
But for several months, crypto-believers have been waiting for a complex update of the Ethereum network software known as “union”.
In short, the merger will put Ethereum’s core infrastructure on a more environmentally sustainable path, reducing carbon emissions by 99%, according to the nonprofit behind the network. This is the simple version, however it took years of research and testing to get it, and it wasn’t clear what would happen because like so many things in the cryptocurrency world, a lot has never been done before.
The merger appears to have been completed smoothly so far.
Here’s what you need to know:
When they hear critics criticizing cryptocurrency for absorbing as much energy as Argentina, for example, or comparing the energy bitcoin takes with the energy of every refrigerator in America, they are talking about the global community of computers needed to verify. transactions under the Proof of Working Protocol.
So far, both Ethereum and Bitcoin are working on Proof of Work, which requires high-powered computers to verify transactions and “mine” new coins on a global and decentralized computer network.
It can be summed up in this: proof-of-work is bad for the environment and very bad for the cryptocurrency industry.
The long-awaited merger has shifted Ethereum towards a more energy-efficient “proof-of-stake” mechanism for validating transactions.
What will happen now?
Barring any obstacles to integration, the Ethereum network, which includes the entire NFT (non-fungible token) community, is expected to function as before, but using radically less electricity, proponents say, making the network more secure.
Will Bitcoin follow suit?
it is unlikely. There are deep philosophical divisions in the cryptocurrency world over the usefulness of the underlying technology.
“Frankly, Ethereum and Bitcoin have very different cultures,” said Laura Sheen, host of the “Unchained” podcast, adding: “While it is technically possible for Bitcoin to change its infrastructure, as Ethereum just did, Bitcoin users see ‘ Proof of Works as an excellent way to protect your network. “
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