The Proof-Of-Stake Coin
The Merge was executed on September 15, 2022. This completed Ethereum's transition to proof-of-stake consensus
Cheat Sheet -
Support and resistance levels and our daily, weekly and monthly bias on BTC, ETH, OIL, ES, and NQ as well as our favorite altcoins.
Ethereum activates The Merge as it shifts to proof of stake (The Block)
Final proof-of-work Ethereum block used to create 'vanity' NFT (The Block)
South Korean authorities seek to invalidate Do Kwon's passport (The Block)
Crypto Unit of Japan's SBI Wins Capital Markets License in Singapore (CoinDesk)
Coinbase Enlists Broadridge Financial to Improve Liquidity (CoinDesk)
Ethereum community wastes no time minting PoS NFTs right after the Merge (CoinTelegraph)
In Nod to Multichain Future, Startup Layer-1 Eyes Solana Scaling Solution (Blockworks)
Coinbase Adds Crypto Policy Integration (Blockworks)
Forked Ethereum Token ETHW Surges, Then Tanks Following Merge Event (Decrypt)
Let’s take a break from the price for a moment to discuss the event that has take place today on the ethereum blockchain. “The Merge” is now complete, and what was it?
The Merge was the joining of the original execution layer of Ethereum (the Mainnet that has existed since genesis) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminated the need for energy-intensive mining and instead enabled the the network to be secured using staked ETH. It was a truly exciting step in realizing the Ethereum vision—more scalability, security, and sustainability.
If you are not familiar with the intricacies of how Bitcoin mining and Ethereum mining work the short of it is that they were similar, both using a Proof-Of-Work (POW) algorithm to secure the network and now Ethereum has adopted a new algorithm called Proof-Of-Stake (POS). It was a huge technical, challenge and a big risk to transition Ethereum from POW to POS, especially with the explosive growth of DeFi and NFTs since 2020. This meant the technical switch from POW to POS could have no errors or billions of dollars of investors funds would be lost.
But it worked! Well, it appears to be working. I personally have been using the main ethereum POS network and arbitrum (a layer 2 network running on top of ethereum) all morning since the merge completed.
It is an exciting moment for crypto because before the merge Ethereum was just Bitcoin with a lot of added features, but now it truly is a different technology with a different goal than Bitcoin. The ETH maxis have been saying this is the moment Ethereum will flip Bitcoin in price or market cap and the Bitcoin maxis say that Ethereum has now sealed its fate by losing the powerful security of POW. Yet, the world has a way of moving in the middle. Whether ETH grows larger than BTC or not these two networks are likely to continue to grow side by side although now with clearly defined and distinct use cases.
Yes - ETH can be used as money and Bitcoin can support some smart contract capabilities. It’s clear this move to POS will lock in Ethereum’s place as the best smart contract capable, secure crypto network. The best argument for why BTC continues to be a better money is exactly that it didn’t go through a merge. The Bitcoin source code is tiny compared to the Ethereum network and rarely changes. However, the success of the merge should build confidence in ETH holders and network users that the team managing the evolution of Ethereum is doing a good job with proper diligence. This risk doesn’t need to be discounted in holding BTC as the governance of the source code is naturally resistant to change. The governance around Ethereum is designed to support the evolution of the network as seen fit by the governing bodies [Vitalik ;-)].
There are still a lot of unknowns in the coming weeks as the POS network moves through its early phases of existence and experiences varying amounts of stress. So far the initial results are promising.
Want more from Foot Guns? Join our Discord where we have live conversations about the market.