- The second largest coin has moved from the Proof-of-Work mechanism of verifying transactions to the Proof-of-Stake
- High capital required and the technical difficulty of setting up a validator system reduce the number of people who can validate transactions
- The new system requires validators to stake 32 ETH to enable them to confirm transactions to the Ethereum Ledger
After years of waiting the Ethereum merge finally happened Thursday last week. The second largest coin has moved from the Proof-of-Work mechanism of verifying transactions to the Proof-of-Stake. As expected by many crypto enthusiasts, the price of Ethereum plummeted, but there is an air of optimism that the Merge effects will take some time before manifesting.
There is a question, however, as to whether Ethereum is becoming more centralized due to the Merge. How does that affect the coin, considering decentralization has been among the most attractive features of cryptocurrency?
How does the Proof-of-Stake Mechanism affect cryptocurrency
Proof-of- Stake changes how transactions are validated. Contrary to the Proof- of- Work, it uses a lesser system of computer networks to mine Ethereum. On the bright side, Ethereum has reduced its energy transactions by 99 per cent. Additionally, the Merge has reduced electricity consumption worldwide by 0.2 per cent.
How is Ethereum losing decentralization
To become an Ethereum miner, they first need to own the asset to participate. The new system allows validators to stake 32 ETH to enable them to confirm transactions to the Ethereum Ledger.
The high capital required and the technical difficulty of setting up a validator system reduce the number of people who can validate transactions. The Ethereum whales are now better positioned to mine Ethereum and hold more of it.
The number of computers and the time taken to validate transactions has significantly decreased. That begs the question of whether Vitalik Buterin and the team intend to make Ethereum more centralized.
If any cryptocurrency indicates any direction towards centralization, they lose all credibility towards calling out Central Bank Digital Currencies.
After a few hours following the Ethereum merge, two entities had added over 40 per cent of the network’s blocks. According to an Ethereum infrastructure firm, the two entities, Lido and Coinbase, had built 420 out of the last 1,000 blocks.
The firm confirmed that just seven players own more than 67 per cent of the Stake in Ethereum’s Proof-of-Stake network. The quantification was through the measure of network power under the new miner-free system.
In the United States, Ethereum is inching closer to government transaction censorship.
PulseChain to rival Ethereum
The transition has also displaced Dogecoin to the second largest coin using Pos, as Ethereum, takes the top position. One of the critical defects of the most diverse ecosystem, the Ethereum ecosystem, is the gas fees involved in doing transactions. We await to see whether the Merge will change that.
The creator of the meme coin Dogecoin, Richard Heart, is in the final steps of launching the PulseChain network, which intends to rival the Ethereum ecosystem. Richard Heart has gained a large audience after the rise of Dogecoin, and most of them believe that PulseChain is a potential rival of Ethereum.
The decline in the price of Ethereum seems like good news to Richard and the team, as they have an interesting case to sell to the crypto ecosystem.
The launching date is yet to be disclosed, but the sacrifice period ended in April this year.
Vitalik suggests a US$30,000 Ethereum bullish run
In an interview on Youtube live on Saturday, Ethereum’s CEO indicated that he is optimistic that the Merge will help Ethereum to propel to the US$30000 mark.
The sentiments by the Ethereum boss excite quite a crowd, but we are only at a wait-and-see situation even as the price plummets to US$1299 at the time of writing.
The transition from PoW to PoS also draws an absolute difference between Ethereum and bitcoin. The conversation as to whether Ethereum will overrun bitcoin has settled, or has it not?