Ethereum, the second-largest blockchain by market cap, is about to undergo a massive transformation known to the crypto community as “the Merge.”
It’s a long-awaited systemwide upgrade that experts say will reduce the blockchain’s energy consumption by about 99% by switching its transaction verification system away from “proof-of-work,” which relies on crypto “miners” using massive amounts of computing power to validate transactions.
After the Merge, Ethereum will use a “proof-of-stake” system that instead uses an algorithmic lottery to determine who gets to validate transactions (and win tokens as a reward for doing so) out of a pool of “stakers” who temporarily deposit their coins to help secure the network.
Crypto’s environmental impact has long been a point regulators and the public count against it — a single Ethereum transaction, for example, consumes about as much energy as an average U.S. household does during a full workweek, Fortune reported last year. That’s part of why Vitalik Buterin, Ethereum’s most visible founder, has been laying the groundwork for the Merge since as early as 2014.
The upgrade was meant to take place in 2016 but kept getting pushed back by the Ethereum Foundation, the nonprofit that helps maintain the Ethereum blockchain. It seemed like it would finally occur earlier this summer and then was pushed back yet again.
It appears the Merge is finally going to happen on September 15, now that testing has been completed. But despite the longstanding discourse about it, there are still plenty of misconceptions floating around regarding what will actually happen during the Merge.