By Kevin Roose | The New York Times
Crypto could use a bit of good news these days. And on Wednesday, it got some.
Ethereum, the most popular crypto platform, appears to have successfully upgraded its software architecture from a type of blockchain known as “proof of work,” which it has run since its inception in 2015, to a type of blockchain known as “proof of stake.”
This upgrade, which came to be called, simply, “the merge,” is already being heralded as a watershed moment in the history of crypto.
Early Thursday morning, as the first proof-of-stake transactions were verified, dozens of Ethereum developers gathered on a celebratory Zoom call hosted by the Ethereum Foundation.
“This is the first step in Ethereum’s big journey towards being a very mature system,” Vitalik Buterin, Ethereum’s founder, told the group. “To me, the merge symbolizes the difference between early stage Ethereum and the Ethereum we’ve always wanted.”
And many crypto fans hope that it will turn things around for the crypto movement, which has been besieged in the past year by trillions of dollars in losses, a string of major scams and hacks and a new wave of regulatory scrutiny.
I’m not so sure it will. But before I tell you why, let’s review some of the reasons that crypto supporters are celebrating.
First, it was far from a given that the merge would work. Switching a blockchain’s so-called consensus mechanism — the way that it processes and verifies new transactions — is terrifyingly complex. (Some crypto developers have compared it to swapping out a spaceship’s engine midflight.) Before the merge, nobody had tried such a maneuver on a crypto platform anywhere near Ethereum’s size, and it took years of testing and research (and many, many delays) for developers to get confident enough to attempt one. Ethereum, which is open source, hosts hundreds of billions of dollars’ worth of cryptocurrency transactions, NFT collections and DeFi protocols, all of which could have been irreparably broken if the merge hadn’t gone according to plan.
“The environmental impact of using miners to validate Ethereum transactions was one of the biggest drawbacks for crypto, especially because Ethereum has been the most widely used blockchain for years. Now that Ethereum has moved to proof-of-stake, I wouldn’t be surprised to see historically crypto-hesitant brands and institutional money finally pour into the space.”
–Omar Abdallah, Rose Law Group Web3 Lawyer