Cryptocurrency experts say the changes, expected to take place between Tuesday and Thursday, will reduce energy consumption by more than 99 percent.
An army of computer programmers scattered across the globe is set to test one of the biggest software upgrades ever crypto sector have seen this week to reduce energy consumption environment is not friendly.
Developers have spent years working on a more energy-efficient version of Ethereum blockinga digital ledger that supports a multibillion dollar ecosystem of cryptocurrencies, digital tokens (NFT), games and applications.
Ethereum, the second most important blockchain after Bitcoin, burns more electricity every year than New Zealand.
Experts say the changes, expected to take place between Tuesday and Thursday, will reduce energy consumption by more than 99 percent.
Enthusiasts hope the greener Ethereum will drive wider adoption, especially as a way for banks to automate transactions and other processes.
But so far, the technology has mostly been used to create speculative financial products.
ING Bank said in a new note that the switchover could help Ethereum gain acceptability among policymakers and regulators. “This could also give impetus to traditional financial institutions to develop ethereum-based services,” the bank said. –
The change, called a “merger”, will change the way transactions are recorded.
At the moment, so-called crypto miners use computer energy-guzzling rigs to solve puzzles that reward them with new coins, a system known as “proof of work”.
The new system will get rid of miners and computer stacks at night.
But “validators” must put up 32 Ether (worth $55,000), Ethereum cryptocurrency, to participate in the new “proof of stake” system where they get a reward for their work.
But the joining process will be risky.
Blockchain company Consensys called it a “monumental technological milestone” and the biggest update to Ethereum since its launch in 2015. Critics have questioned whether the upgrade will go unnoticed, given the sector’s history of instability.
Ethereum went offline in May for three hours when a new NFT project caused a surge of buyers that overwhelmed the network. Several exchanges and crypto companies have said they will halt transactions during the merger process.
‘Decentralized and complex’
The upgrade also faced a backlash from crypto mining companies whose business would be severely disrupted.
They can try to hijack the process or create a “fork”, basically a small blockchain that will continue with the old mechanism.
And even if the “merger” is successful, Ethereum will still face major hurdles before it can be adopted more widely. For example, it is expensive to use and updating will not reduce the cost.
The broader crypto sector is beset by fluctuating prices, security flaws, and various scams.
Crypto lawyer Charles Kerrigan of the company CMS said that Ethereum is “decentralized and complex” and has not been tested enough for governments and banks to sign on.
“There are questions about how easy it is to deal with upgrades of the type that traditional software vendors provide to customers,” he said. “A successful merger will answer that question.”