‘No crazy bug’: Here’s the latest on the Ethereum merge

The shift from a proof-of-work to a proof-of-stake protocol will speed up transactions and greatly reduce the amount of energy used by the blockchain.

| More on:
woman examining ethereum price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Ethereum’s test run on its upcoming merge encountered only minor issues
  • The transition from proof-of-work to proof-of-stake requires far less computing power to verify transactions
  • People wishing to serve as validators on the blockchain will need to stake 32 Ether

Ethereum (CRYPTO: ETH) is inching towards the ‘merge’ finish line, having just completed a successful test run.

Ether is the second-largest crypto by market cap, trailing only Bitcoin (CRYPTO: BTC). However, the Ethereum blockchain is the most used in the world.

Unfortunately, that blockchain also uses a tremendous amount of energy. Like Bitcoin, it employs a proof-of-work protocol to verify transactions and create more tokens. Proof-of-work requires immense computing power across an array of machines.

The so-called merge will see Ethereum shift to a proof-of-stake protocol. This will see validators stake their own Ether to verify transactions and create new tokens. And it will not only speed up transactions, but it will also hugely decrease the amount of required electricity.

A good plan.

Yet one that’s seen years of difficulties and setbacks coming to fruition.

What happened with the merge test?

The dry run carried out on Wednesday indicated that the merge works on a testnet where, as the name implies, developers test new processes before implementing them on the mainnet.

According to Auston Bunsen, co-founder of QuikNode (courtesy of CNBC), “There was no crazy bug that happened. Everything went as smooth as it could be.”

Tim Beiko, the coordinator for Ethereum’s protocol developers, noted that they did encounter “some minor known issues”. But he added that those will be looked into before the next steps of the merge are discussed.

The Ethereum beacon chain

The proof-of-stake protocol tests are being done on what’s known as the beacon chain.

According to Beiko (quoted by CNBC):

We knew that there would be a lot of technical work to address things like the increased centralisation that we see in other proof-of-stake systems. We’ve achieved that with the beacon chain…

At each testnet, we expect the code to be closer to what will be used on the Ethereum mainnet. We’re looking for less friction every time. Hopefully the minor issues we’ve seen today are resolved by the time we upgrade the next testnet.

No action needed by Ethereum users

“Users should be aware that Ethereum’s transition to proof-of-stake requires no action on their part unless they are a validator on the network. The transition also won’t create any new Ethereum tokens,” Beiko added.

The latest proof-of-stake plan requires people interested in being a validator to stake 32 Ether. That’s just over US$57,600 at current prices.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Cryptocurrencies

a man sits in casual clothes in front of a computer amid graphic images of data superimposed on the image, as though he is engaged in IT or hacking activities.
Cryptocurrencies

Will the next era of computing break the Bitcoin price or boost it?

Cryptos have taken a beating over the past months as interest rates around the world ratcheted higher. But is there…

Read more »

a shiba inu dog looks happily at eh camera with his tongue out while his owner hods him on his chest as he sleeps on a hammock.
Cryptocurrencies

Here’s why the Dogecoin price has had such a great week

Economic data out of the United States and a surprise announcement by BlackRock offered some healthy tailwinds to cryptos over…

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Cryptocurrencies

Why this Bitcoin maximalist says all other ‘crypto is a scam’

Initially introduced in a 2008 whitepaper by one or more people going by the pseudonym of Satoshi Nakamoto, Bitcoin launched…

Read more »

A hand reaching into a computer to grab digital money, indicating a rise in the use of cryptocurrency
Cryptocurrencies

Why an RBA-issued crypto-like currency could soon be a reality

The RBA is piloting a central bank-baked digital currency.

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Cryptocurrencies

Can the Bitcoin price reach US$30,000 again in 2022?

Rising interest rates have resulted in significantly less institutional investor interest in cryptos.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Cryptocurrencies

Could this key metric signal more bad news for the Bitcoin price?

Crypto investors are keeping a close eye on the signals that could see the US Federal Reserve begin to ease…

Read more »

Man sitting at a desk facing his computer screen and holding a coin representing discussion by the RBA Governor about cryptocurrency and digital tokens
Cryptocurrencies

Is it smart to use dollar cost averaging to buy Bitcoin?

Should investors consider a DCA strategy for cryptocurrencies like Bitcoin?

Read more »

A hip young guy works at his home workstation with two screens and a gamers chair, keeping an eye on his crypto investments.
Share Market News

Bitcoin price dips in August after soaring 22% in July. What’s going on?

The greater presence of institutional investors in crypto markets looks to be adding to the correlation between cryptos and other…

Read more »