The great Ethereum switcharound is officially on, and is most likely happening on September 15.
That’s the day that the Ethereum blockchain moves from a proof-of-work system for verifying transactions to a proof-of-stake system, and with millions of dollars being transacted daily, it’s a switchover that has to go smoothly.
The Ethereum Foundation have been keeping coin-holders informed of progress via their YouTube and have been carrying out a number of small ‘test runs’ to ensure that everything passes seamlessly without a hitch. Now they’ve submitted this tentative ‘pull request’ that shows the moment that the switch will happen.
The magic number is 58750000000000000000000. That relatively round number has been chosen as the Terminal Total Difficulty (TTD) for the network and marks the precise moment where the mining of a particular block on the old network ends and work on the new one begins.
It’s expected that the network will reach that TTD on or around September 15. At that moment the network will switch to its new method of verification and all blocks will remain valid and checked and all currency will continue to exist.
At least that’s the plan, if the brains at The Ethereum Foundation get their sums right.
Why make the switch and run the risk?
So why potentially jeopardise the existence of the world’s second biggest cryptocurrency (after Bitcoin) and 232 billion dollars worth of coin-holder’s cash?
It’s all to clean up Ethereum’s bad eco standing – essential if the currency is to gain favour with the increasing number who value such things – and to speed up transactions – essential as the number of transactions increases and the projected market grows.
Proof-of-stake is a far less computationally intensive method of verification, requiring holders of the currency to stake some of their assets in order to win the right to carry out a verification check on the blockchain. Thus one computer carries out the transaction with others checking it. This is opposed to the proof-of-work method currently used (and used by all ‘older’ more established crypto such as Bitcoin) where tens of thousands of computers fruitlessly complete to compute the transaction with one winner and thousands of losers having wasted their time and energy. Literally.
Get a guide to proof-of-work and proof-of-stake here.
Pressure has been increasing on Ethereum to make the jump, with more ‘eco’ crypto built on proof-of-stake – such as Solana, Cardano and Stellar – becoming more popular with greener, forward-thinking businesses keen to get into crypto without causing customer upset.
Needless to say, the switchover is a highly complex process and the jump has been years in the making. Now, after promising to make the change and carrying out multiple tests it’s finally going to happen.
How is ‘the merge’ going to happen?
The latest, and largest, of these tests – or ‘shadow forks’ – just occurred and has been deemed a success. The Ethereum Foundation has been running a proof-of-stake workflow on a sidechain called Beacon, running alongside the existing chain since December 2020. On Wednesday 10 August another of Ethereum’s test networks named Goerli executed the process identical to what the main network (aka Mainnet) will carry out in September.
It’s become known as ‘The Merge’ – where old data seamlessly ‘merges’ with the new data and nothing is screwed up or lost.
The first check was to see that the blocks after the switch weren’t empty and had transactions in them – tick – with the final test being ‘finalisation’, checking that two-thirds of validators agree to the same view of the chain history. After 15 minutes this too was deemed a success, resulting in that pull request that – at the time of writing – will happen for real on or around September 15.
What happens after ‘The Merge’?
The outcome? Hopefully there’ll be no perceptible change at all except for potentially noticing faster transactions as the system moves from around 14 per second to several thousand and – it’s to be hoped – cheaper gas fees as a result. Plus – imperceptibly – there’s the fact that the system now has lots more bandwidth for greater adoption in the future, and the knowledge that your Ethereum-based holding is now using around 1% of the energy that it was prior to that moment.
So, nothing to worry about?
There are of course a few worries, naysayers and advocates of ‘getting out of Ethereum before the merge’ and there’s much speculation as to potential spikes and troughs around the date as heavily invested miners (owning hugely-expensive crypto mining rigs for proof-of-work computation) dump their holdings and head elsewhere.
Plus, of course, if the experts get their maths wrong, resetting the blockchain to restore everyone’s positions will be literally impossible resulting in a not-exactly-ideal year zero for Ethereum…
But it’s a situation similar to the ‘will it, won’t it’ mild tension the world endured during the start of the millennium, with global worries as to the potential existence of ‘the millennium bug’. It was believed that thanks to early computer programs only using two digits to represent the year and subsequent banking and business programs being built on top of these, that, come midnight 1999, something somewhere would be reset to zero…
In the end the new millennium passed without consequence and any worries were misplaced. The Ethereum Foundation and millions of ETH holders will be hoping that September 15 passes similarly without consequence.