When is the Ethereum Merge?

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Contributor, Benzinga
September 6, 2022

Ethereum was an idea initially put on paper by Vitalik Buterin in 2013 and officially launched a year later. While its forefather, Bitcoin, was primarily focused on payments and transactions, Ethereum’s main goal is to facilitate decentralized software that can be used in a variety of contexts. For example, companies are building artificial intelligence (AI) networks on Ethereum, while others are building decentralized exchanges (DEXs) in hopes of changing financial markets. Whatever is being built on Ethereum, however, is meant to be protected from fraud and censorship. Ethereum grew a bit too quickly and needs pertinent upgrades to its software. One of the most consequential of these upgrades, coined “The Merge,” is set to happen soon.

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Why Does Ethereum Need Upgrading?

When Ethereum was initially created, Buterin didn’t know that the idea would scale to something as large as it has. With a market cap of around $200 billion and a daily volume of around $20 billion, the humble beginnings of the project brought about an inability to keep up with such growth. This state of affairs caused several issues that Ethereum has been grappling with for some time.

The main issue surrounding the high-paced growth is that of complex transactions and the fees associated with these transactions. Each transaction on the blockchain requires a fee to pay verifiers since there is no central entity for verification. As the number of transactions outpaced the technical limits imposed by the network’s code, increased transaction fees started to hamper the number of transactions and incentivize verification.

The situation got out of hand, and transaction fees soared above $10 per transaction and up to several thousand dollars in some cases. On top of this, transaction speed slowed as there were far more transactions than verifiers could handle.

The other major issue with Ethereum is energy consumption. Ethereum currently relies on a proof-of-work (PoW) method of consensus for verifying transactions. The verification process requires that computers guess long strings of numbers as fast as possible to gain the right to verify a block and earn the corresponding reward. These computers use up massive amounts of power. To put this into perspective, Ethereum uses about the same energy consumption as the entire country of the Netherlands and has carbon emissions comparable to all of Singapore.

What is the Ethereum Merge?

The Ethereum Merge is hoping to solve some of these problems in one fell swoop. The Merge will look something like this. Ethereum has been testing a “Beacon Chain” — a distinct blockchain that has been testing a different form of consensus called proof of stake (PoS). This chain has been up and running since December 2020 and has over 400,000 validators. On the day of the Merge, all of the data on the Ethereum main net will be transferred over to this Beacon Chain. From there, it will become the new Ethereum main net. 

Why Does the Merge Matter?

The Merge has a distinct purpose — to use PoS to make Ethereum more environmentally friendly while potentially increasing speeds and lowering transaction costs. PoS system allows validators to give some of their tokens to the blockchain in exchange for the right to verify. If they verify correctly, then they will be rewarded with more tokens. If they do not verify correctly, then the blockchain can confiscate their tokens as punishment. Some estimate that a PoS system for Ethereum will use 99.95% less energy than the current PoW system. 

A PoS system carries a much lower entry cost for validation so there can be more validators, which will hopefully get rid of some of the kinks in the PoW system. 

When is the Ethereum Merge?

At the time of writing, the Ethereum Merge is tentatively projected to happen on Sept. 15, 2022, at 3 a.m. CET. However, this time is speculative and is based on the Terminal Total Difficulty (TTD) because it will likely go live when a specific block of Ethereum is verified and will not have a set date and time. No official announcement of date and time has been announced by the Ethereum Organization. 

The Ethereum Merge has actually been planned since the inception of the network. However, it has been delayed several times in the past. It is possible that it could be delayed yet again.

What is Next For Ethereum?

The Merge could potentially have a large impact on the price of Ethereum. The new consensus method could inspire investor confidence and cause the price to increase. Conversely, the Merge could bring about issues with the network and cause the price to drop. The Merge could already be priced in. Investors could be making moves in anticipation of the event and not much could happen in the days and weeks following the Merge. 

In terms of the network itself, Ethereum is hoping to use the Merge as an opportunity to create more scalable protocols and circumvent the blockchain trilemma to be scalable, secured and decentralized. The Merge may allow it to be the first blockchain to solve the trilemma. 

How to Buy Ethereum

If you are looking to buy Ethereum, you can head over to eToro, Robinhood or WeBull to get your hands on some today.

To get started on these sites, create and verify an account, fund it using a bank or ACH transfer and begin trading. 

Is Ethereum a Good Investment?

The Merge is a long-awaited event in the crypto space. Because of this, it could bring a flurry of investors back to Ethereum and perhaps pump the price a bit. However, betting on this possibility is risky. If you are more risk-averse, it may be better to sit on the sidelines until the dust from the Merge has settled. If you are eager to get in on the action, you can do so, but be aware you will face risks.

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About Caden Pok

Caden has been involved with crypto since 2018, when he began investing, trading, and mining tokens. He took part in undergraduate research studying cryptoeconomics at the University of Michigan, where he will graduate Phi Beta Kappa with a bachelor’s in economics in 2025. He is experienced with DeFi technology and multiple blockchains, currently investing in Ethereum and Bitcoin.