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Ethereum merge-What does it mean for investors?

 

April 7, 2022 (Investorideas.com Newswire)

Ethereum, one of the most popular blockchain/cryptocurrency projects after Bitcoin, is undergoing a major upgrade. Ethereum's core developers are calling it the Serenity update and it is the last stage of a multi-stage journey that started with Frontier back in 2015. The upgrade is expected to bring major changes to the blockchain including a switch to proof-of-stake, increased scalability, and privacy features.

Ethereum's developers are on a mission to turn the world of cryptocurrencies on its head. The Ethereum blockchain was built to support "smart contracts," which allow users to automate certain functions. For instance, one could build a smart contract that automatically pays out when a sensor detects movement.

The technology is powerful, but it isn't perfect. Some significant problems need to be addressed if Ethereum is going to live up to its potential. One of those problems is scalability - the network can only handle around 15 transactions per second right now, which has led to congestion and long wait times when the network gets busy.

That's why developers have been working on what's called a "merge" since August 2015. This merge will introduce all kinds of changes to the way users interact with Ethereum and help solve some of its biggest problems. Here's what you need to know about Ethereum merge:

Facts about Ethereum Merge: How will Ethereum merge benefit investors?

The main change that is coming out of this update is that the Ethereum network will move from its current proof-of-work model, which relies on miners to secure the network and process transactions, to a proof-of-stake model where holders of Ether (ETH) will be able to earn interest on their holdings. The Ethereum blockchain is moving to a new proof-of-stake mechanism called Casper.

This move provides an interesting alternative for investors looking for how to buy Ethereum UK and earn money from their portfolios as it means you can hold Ether in your account and earn interest from running a validator node. In addition, it is still possible to use Ether as a currency in trading activities or pay for services without paying high transaction fees so there are no drawbacks when using it as a regular cryptocurrency.

The developers of the Ethereum network rolled out a software update that will change its architecture and better protect it from hacks. The so-called Byzantium upgrade is the first in a series of upgrades that will ultimately lead to Ethereum's next milestone: switching over to a more secure proof-of-stake system.

The change will simplify the process of verifying transactions and reward users who contribute to the network. The biggest change is that people no longer have to spend large amounts of electricity to mine Ethereum," said Vlad Zamfir.

What is proof of stake?

Proof of stake is one way of keeping a blockchain secure - or in other words, preventing people from tampering with transactions that are recorded on the network.

Most blockchains rely on a method called proof of work where miners compete to solve complex cryptographic puzzles to verify transactions and add blocks to the chain. The miner who solves the puzzle first gets rewarded for their effort.

The problem with this approach is that it requires significant resources - both technical and financial - to participate. Miners need powerful computers as well as access to cheap electricity if they are to stand any chance of turning a profit.

The first thing to note is that the Ethereum merge is not a "hard fork". Hard forks are when a blockchain splits into two competing blockchains which can never be reconciled. This is what happened with Bitcoin and Bitcoin Cash in August 2017.

The Ethereum merge, on the other hand, will see Ethereum and Ethereum Classic become one blockchain. It's more akin to a "soft fork" or a backward compatible upgrade to the network.

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