Ethereum “merging” sets the stage for the next iteration of the internet


Brian Mossoff: This is the beginning of the next frontier of the blocks

Article content

Ethereum, which was invented and incubated in Canada, is the second largest cryptocurrency by market capitalization and the most innovative development basis in the industry, has just completed a program upgrade referred to as Ethereum. merge.

Ad 2

Article content

All over the world, computer programmers, blockchain enthusiasts, and even a few skeptics have held virtual broadcast parties to watch the action in real time. It was one of the biggest events in Cryptocurrency History, but many people outside the industry probably didn’t notice, maybe thinking it was just more crypto kids paying more tech bullshit.

Article content

However, it is important to understand what this software upgrade was all about. At its core, blockchain is about recording information. Bitcoin secured and ordered these transactions through a process called Proof of Work (PoW), more commonly referred to as mining, when it came into existence in 2009.

Satoshi Nakamoto, the anonymous Bitcoin inventor, dreamed of ordinary people using their home computers to help secure the ledger and receiving the original token, Bitcoin, as a reward for their efforts. Within a few years, application-specific integrated chips (ASICs) came onto the scene, making mining sharing on the home computer no longer viable. The original hardware was replaced by data centers and specialized computers that consumed huge amounts of power.

Advertising 3

Article content

Ethereum I entered the arena a few years later with a new smart contract platform (and the ability to program assets) and follow in Bitcoin’s footsteps with Proof of Work as well.

But initially, there was another idea that came up called staking that could theoretically one day replace power-intensive PoW mining while maintaining the integrity of the network. Not only will this new solution significantly reduce energy usage, but it will democratize the validation process by giving token holders the ability to approve transactions that require less hardware.

In Ethereum Proof of Stake (PoS), users can become validators and lock (stake) their ether, like entering into a bond with the protocol. They then take turns accepting transactions and receiving newly created ether (staking rewards) in exchange for helping to secure the network. Under this new system design, there will be no need for access to specialized computing chips or electricity, which means greater participation from ordinary users and less stress on the environment.

Advertising 4

Article content

Since its launch, Ethereum has grown from a new game to a $200 billion platform, with $300 billion in assets and applications based on its uptime and functionality. For the past seven years, researchers and developers have been trying to fulfill this early promise.

Several proposals were proposed for the correct technical implementation, but the developers again found themselves in the drawing board, constantly delaying the upgrade. Investors and community members began to doubt that it would pay off.

In 2020, consensus is beginning to form around the technical parameters that make it appropriate to launch this new and improved version of Ethereum. Due to the high risks related to the scale of the project, the new platform was launched in pseudo-incognito mode with limited functionality.

Advertising 5

Article content

After a year and a half, it’s time to bring the two networks together and move the combined $500 billion into this new app. Everything before this moment will happen within 12 seconds and without any changes visible to the end user. Do not pause in normal activity, downtime, or broken interfaces.

Some described the event as driving a car at 100 km/h and replacing the combustion engine with an electric battery without the driver slowing down or noticing anything had changed.

Fortunately, the merger went without a hitch. Just before 3 a.m. ET on September 15, we waved goodbye to mining Ethereum and ushered in a new era, one without specialized computing hardware and electricity requirements like those of small countries.

Advertising 6

Article content

The merger marks one of the most important turning points for Ethereum and the web, paving the way for the next iteration of the internet. If we want to believe in a future where there are trillions of dollars worth of assets and activities on the blockchain, it will require a system like Proof of Stake to remain stable and secure.

This new system gives new opportunities as well. There is now an incentive for individual and institutional investors to rely on assets that comply with ESG mandates.

Above this, tied capital of any size can generate the same return, and economies of scale have become irrelevant. This may be the incentive our pension funds need to enter the sector and we have confidence that this innovation is built to last.

Advertising 7

Article content

New lines of business also began to emerge. Local digital asset exchanges will have new product lines to offer to their clients, and to support this, specialized infrastructure companies will be formed. Figment Networks Inc. has emerged. headquartered in Toronto, as one of the largest globally recognized staking providers for both institutional clients as well as retail-facing platforms. Businesses like Figment were not possible only a few years ago.

But the Ethereum upgrade is not complete. In the coming years, several technology upgrades will be launched, significantly reducing transaction fees that have historically reached $50 per transaction, leading to user pricing and lower value activity. This activity felt stuck, without another blockchain going through without serious trade-offs in security.

Ad 8

Article content

In addition, the network will be able to process 1,000 times more transactions per second. A successful blockchain of the future will need to handle different spectrums of activity in terms of value and throughput to truly become a global settlement layer.

The launch of Proof of Stake is one of the most impressive achievements in computer science to date, and it was all developed by a decentralized group of participants. This is the beginning of the next frontier of blockchain networks and the right decision for a technology group that is aware of the ongoing climate crisis and can envision a world where people are transparent and independent in their financial affairs.

Brian Moussoff is the CEO of Ether Capital.

Ads

comments

Postmedia is committed to maintaining an active and civil forum for discussion and encouraging all readers to share their opinions on our articles. Comments may take up to an hour to be moderated before they appear on the Site. We ask that you keep your comments relevant and respectful. We’ve enabled email notifications – you’ll now receive an email if you receive a response to your comment, if there’s an update to a comment thread you’re following or if it’s a comment follower user. we visited Community Guidelines For more information and details on how to set a file E-mail Settings.


Leave a Reply

Your email address will not be published. Required fields are marked *