After years of waiting, Ethereum has finally made a significant upgrade to the network, which is titled by some as the ‘Merge.’ The upgrade will completely transform how the Ethereum blockchain secures the network, mints new tokens, and verifies its transactions.
It’s known as proof-of-stake, and the method effectively cuts down Ethereum’s energy use by a whopping 99 percent. This comes as great news because for years, a major critique of cryptocurrency has been the energy that the mining process consumes.
Bitcoin Not Likely To Upgrade to Proof-of-Stake
While the second biggest crypto has made the leap, it’s not likely that top ranking cryptocurrency, Bitcoin, will follow in its footsteps. In fact, it seems as though Bitcoin will stick to the current method, which is proof-of-work.
The method involves using advanced computers to guess on the right number, which will verify a transaction and create a new token in the process. This is how the Bitcoin blockchain mines new coins.
Currently, guessing the right number takes computers more than a hundred sextillion tries. That’s one thousand million million million, or 1,000,000,000,000,000,000,000 tries.
By having miners do so much work, the network remains secure. That’s because it’s almost impossible for hackers to gain the necessary computing power to control the system.
Of course, this comes at a cost, as research indicates that Bitcoin mining used 75.4 terawatt hours of electric power in 2020. That’s more than all of Portugal or Austria.
Ethereum Network Swaps Out Miners For Validators
Although the Ethereum network previously used the proof-of-work system, it recently switched out its miners to introduce validators.
Rather than participating in a massive guessing game that involves significant amounts of computational power, validators will verify new transactions. By doing so, they will earn Ethereum tokens as a reward.
Of course, that brings the question of security and how the network will remain safe from bad actors. The new system maintains integrity by having validators make a security deposit. This way, they’re staking a specific number of Ethereum tokens to the network.
So if a validator tries to hack into the network, their deposit will be eliminated. Proponents of Ethereum explain that such a penalty will prevent validators from acting maliciously.
Bitcoin’s Energy Use Creates Problems for The Network
While Bitcoin fans prefer proof-of-work as a more secure option, the significant energy costs amid the global climate crisis is creating problems for the network.
As a way to tackle this issue, some Bitcoin miners are making the switch to renewable energy to power their computers and data centers.
Meanwhile, others are claiming that the network’s use of energy is an asset, because it will help in investing in the country’s outdated energy grid.