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With update to Ethereum, the world’s second-largest cryptocurrency claims it’s going greener

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6th day9:40Update to Ethereum Claims World’s Second Largest Cryptocurrency Is Greener

The virtual currency Ethereum has Migrated to a new operating system It relies on fewer computers to confirm transactions.

As mentioned, the merge is said to reduce 99.9% of the energy used by Ethereum’s previous proof-of-work system, according to the foundation behind the cryptocurrency. The amount of energy Ethereum used before Thursday’s update was compared to powering a “medium-sized” country.

Vitalik Buterin invented Ethereum in 2013. It has grown to be the second largest cryptocurrency in the world. The new update uses something called Proof of Stake Consensus to validate transactions.

“And we finalized!” Buterin tweeted Thursday. “Congratulations to everyone on the merger. This is a huge moment for the Ethereum ecosystem. Everyone who helped make the merger happen should be very proud today.”

Christine Kim is a researcher at galaxy digital We have analyzed what this change means for crypto miners and the environment.

“Instead of relying on miners, we rely on other network stakeholders called validators,” says Kim. “Validators are not in this race trying to solve this puzzle, trying to find the correct value.”

Validators use computers to maintain system integrity and maintain an ongoing record of cryptographic transactions. They are “randomly selected by the network,” and to ensure authenticity, validators are cryptographically compensated, she added.

Gold-plated souvenir cryptocurrency Tether (USDT), Bitcoin and Ethereum coins placed next to a screen displaying trading charts. Tether is an Ethereum token known as a stablecoin pegged to the value of the US dollar. (Justin Tallis/AFP/Getty Images)

a report “Merge will reduce the power consumption and carbon footprint of the Ethereum network by more than 99.988% and 99.992% respectively,” announced Thursday by the Crypto Carbon Research Institute (CCRI).

CCRI estimates that Ethereum used 23 million megawatt hours (MWh) of electricity per year before the merger. Currently, cryptocurrencies are estimated to use 2,600 MWh annually. This corresponds to the consumption of about 100 people. Canadian household.

Christine Kim spoke to CBC Radio 6th daypart of a conversation with host Saroja Coelho.

I would like to know how Ethereum performed before it made these commitments on its carbon footprint.

Before the merger, Ethereum operated under the Proof of Work Consensus Protocol. Fundamentally, the Proof of Work consensus protocol relies on miners. This energy-intensive mining process is to generate new blocks on the network.

If my understanding is correct, this is because in the Bitcoin or Ethereum world, you can’t actually hold this product in your hand and say, “Hey, this is money.” It’s a way of providing evidence. Anyone say they actually existed?

That’s a great way to put it. This is how the network reaches agreement on the canonical version of the ledger.

It is this trading history that everyone needs to come to an agreement on. Because if agreement cannot be reached and consensus cannot be reached, there may be two versions.

Digital coin mining equipment and hardware on display at Crypto Expo in Thailand. (Adirach Toumlamoon/Shutterstock)

You were talking about crypto mining. Can you describe in the simplest terms what it actually looks like?

I think people think of it like going into a coal mine and digging out something else like gold or silver. What this means is that there are these network stakeholders trying to solve a very computationally expensive puzzle, and they are doing this by guessing at many values.

One of these values ​​is the correct value required to create a new block. And when it finds that value, it broadcasts it across the network and tries to run it first.

Once you get that value, the network rewards you with a certain amount of network issuance based on a theorem.

Ethereum is the second largest cryptocurrency in the world and was founded by Vitalik Buterin in 2013. (Beata Zawrzel/Shutterstock)

Are you basically talking about replacing a lot of physical work and showing some proof that this money exists by having people validating it?

Staking can be thought of as similar to bonds. Locking up your capital for a period of time guarantees a return on your investment.

That makes it a very attractive and productive asset. But to earn this passive reward, you have to run this software as a validator.

This process of creating validators – where everyone puts a stake in the currency and no extra physical work or energy savings – has me wondering what it means for the wider cryptocurrency world. increase?

This is a big question as Ethereum in the cryptocurrency world is actually one of the few major currencies still in the proof of work. As Ethereum moves away from proof-of-work, the only major cryptocurrency that continues to rely on energy-intensive mining processes will actually be Bitcoin.

This is truly unprecedented.– Christine Kim, Researcher, Galaxy Digital

Many people must have been involved in providing that proof of work. What happens to them when you make this switch? What happens to the people who were mining cryptocurrencies?

Unfortunately, miners who stay on Ethereum don’t have many options in terms of where else to go.

I believe a small percentage of miners have migrated to other smaller networks such as Ethereum Classic and Ravencoin.

I think the majority of Ethereum miners will actually be forced to sell their machines. They are forced to stop all operations.

A new report by the Crypto Carbon Research Institute claims that the size of Ethereum’s energy savings will be similar to the Eiffel Tower shrinking to the size of a small plastic toy figure. (Artur Widak/Shutterstock)

It’s a sign of trust in new ways of doing things. In that cryptocurrency ecosystem, there are large and small investors all over the world, and if this doesn’t work out, they will lose a lot.

This is a very fundamental change for Ethereum.

This is a huge experiment for the size of the blockchain Ethereum to strip its consensus protocol and replace it with an entirely new one without significant network downtime.

This is truly unprecedented.

In addition to the energy story around Ethereum, I think the declining supply is also an interesting story that will pique the interest of investors and traders.

I think this is a truly groundbreaking change that will do wonders for the Ethereum story, especially as an investable asset.

Radio interview with Christine Kim produced by Ashley Fraser. Q&A edited for length and clarity.

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