After eight years of work and delays, the blockchain Ethereum has transitioned to a new method of verifying transactions, known as Proof of Stake. The technical upgrade, called the merge, was completed in the early hours of Thursday morning. It significantly reduces the amount of energy used by the network and sets the stage for Ethereum to lower its fees and massively expand its user base.
“It’s hard to compare it to the genesis day in 2015, but it may end up being more significant,” says Joe Lubin, a co-founder of Ethereum and the founder of the blockchain company Consensys. “It basically takes us into an infinite-transaction-per-second throughput architecture…It’s about to go internet-scale.”
Read More: Why The Ethereum Merge Matters
While varying experts and speculators predicted that the merge would either send the price of Ether skyrocketing or tumbling, prices stayed relatively flat during Asia’s trading day.
While Ethereum launched in 2015, key developers had begun exploring how to implement Proof of Stake a year prior. And while the transition from Proof of Work took many years, the merge’s success (thus far) serves as an ideological victory for Ethereum and its decentralized structure. The network has no board of directors or CEO, but rather a group of dispersed developers and engineers working together from around the world. Leaderless collaboration is a central tenet of blockchains, and Ethereum developers proved their ability to self-organize and painstakingly push towards an enormously technically challenging update over the course of many years.
The merge was designed so that Ethereum users themselves don’t need to do anything: their accounts will update automatically. Many scams have proliferated over the last few months online that prompt holders of Ether to “upgrade” their software, when they are really just trying to steal funds. On Thursday morning, developers signaled that the merge had produced few, if any, major bugs.
Many environmentalists applauded the decision. Ethereum’s previous method of securing the blockchain, known as Proof of Work, uses a massive amount of energy: Last week, the White House released a report on crypto’s environmental impact, saying that crypto-asset activity in the U.S. compares to the country’s greenhouse gas emissions from railroad diesel fuel. A switch to Proof of Stake, the report goes on to say, could “dramatically reduce overall power usage to less than 1% of today’s levels.”
Beeple, who is perhaps the most prominent NFT artist, commemorated the merge in a piece of artwork:
One of the losers of this transition: Proof of Work miners who have been carrying out the energy-guzzling process with large data centers. They’ve invested in equipment that is now useless. As a result, some of those miners have started their own token, called ETHW, that still runs on Proof of Work. While most of the Ethereum community has rejected the legitimacy of the alternate blockchain, it still attracted some day traders hoping to make a quick profit off the activity. That token’s price doubled in value shortly after the merge, before plummeting all the way back down again.
