Celebrating the Ethereum Merge
It took 17 seconds to change the landscape of cryptocurrency. At a fraction before 6.43am UTC on 15th September, block number 15537394 was confirmed by a staking pool, not by a miner. The Ethereum Merge, also known as the Paris Network Upgrade, was complete. Celebrations all around.
But what does this actually mean? Let’s go back to the basics. Crypto gives us a way of moving assets – coins and other digital value – from place to place without having a bank in the middle keeping a record of the transactions. As there’s not trusted bank, we need to be sure that we can trust the system. To do this, a random member of the network is assigned to effectively “sign off” a list of transactions, closing the block and opening a new one in the chain.
The original solution proposed by Satoshi Nakamoto for the creation of Bitcoin was to set an algorithmic puzzle for network members to try and solve using CPU power. This is the Work that is done to secure the chain – Proof of Work. The first correct calculation wins the right to close one block, claim the reward, and open a new block. It’s elegant and reliable and has stood the test of time, but unfortunately all of these CPUs, running 24/7, use a lot of energy and emit a lot of CO2. It’s been described as a game of Hungry Hippos, with all the miners competing to grab that block reward. Ethereum was created in 2015 and used the same system until earlier today.
From the outset, the Ethereum founders wanted to find a new way of randomising that sign-off that was sustainable and energy efficient. Over the past seven years new cryptocurrencies have emerged and experimented with different methods, and the technology and understanding have evolved rapidly. Ethereum settled on Proof of Stake, enabling anyone holding Ethereum, having a stake in the network, to be chosen. This means that the system invites random members of the network to close each block, rather than everyone battling for the honour and the reward. That cuts the energy consumption of the network at a stroke.
A marathon effort
The switch from Proof of Work to Proof of Stake happened without fanfare. Block 15537393 was confirmed by a miner. At the next block, the running total of difficulty passed a pre-set threshold and a smart contract created the Merge Oracle Triggerer, inviting a member of the staking network to do the honours for 15537394.
Simple. Yes, about as simple as replacing the foundations of a skyscraper, as BBC’s Joe Tidy neatly explained. The Ethereum Merge is the culmination of years of work, research, development, testing, parallel running and gradual upgrades under the hood. The effort has been extraordinary. It’s reminiscent of the work that went in to managing the Y2K (Millennium) bug. When the clock ticked over, everything was fine. People assumed it would always have been so, without necessarily acknowledging the huge amount of time and skill that went into delivering the result. The developers who have pulled off the Merge are to be congratulated.
What now?
Sustainability, Security and Scalability are the three watchwords of the Ethereum Merge. It removes, at a stroke, a key reservation that people had over using the Ethereum blockchain. On 14th September, a single transaction used around 200 KwH of energy, (source: Digiconomist). From the point of the Merge, this will drop by at least 99.95%.
Developers believe they have also ensured the longevity of the technology, improving its security and scalability. The Ethereum blockchain ecosystem is vast, and recently has been so overloaded that it has become expensive and slow to use. As capacity rises and costs fall, adoption becomes easier. It’s a huge milestone and a historic moment in crypto. I’m definitely celebrating.