The much postponed Ethereum algorithm change is finally possible — and it means that miners should move urgently

A historic event happened late last night — the Ropsten merged with Ethereum in a test network. It’s a general rehearsal before Ethereum transitions to the Proof-of-Stake algorithm in the core network, which is scheduled for the second half of this year. It’s the most significant change in the architecture of this blockchain in its history.

What exactly happened

The purpose of the test network is to prepare for the merger of the main Ethereum network. The Proof-of-Work chain merges with the Proof-of-Stake chain by combining their codes into one common code. 

The testing is crucial to verify that the new client software using Ethereum nodes works without any glitches. So far, after the merge has already been done, all of the software is running smoothly.

Vitalik Buterin has postponed this project many times, and now it looks like this is the finish line.

Almost all Ethereum development teams participated in the merger: Lighthouse, Lodestar, Prysm, Teku, Besu, Erigon, go-ethereum (geth), and Nethermind.

What the switch to PoS will bring

The new PoS algorithm will give a higher level of energy efficiency and scalability for Ethereum. PoS also allows more nodes to run, which will lead to greater decentralization (at least in theory, how it will be in practice is still debatable).

It is also often claimed that PoS will increase transaction speeds, making Ethereum a faster blockchain. However, higher transaction speeds, lower fees, and better energy efficiency have a downside — PoS will lead to less network security.

 It should be noted that the advantages and disadvantages of PoS and PoW are often controversial, and discussions on the topic generate a lot of heat in the development community. Vitalik Buterin said that disputes within the dev team about which algorithm is better often prevented the constructive development of Ethereum. There is no consensus on the pros and cons of the new approach even within the developers of Ethereum.

What is clear is that the algorithm change will significantly affect miners. If you want to mine ETH, you should already stock up on coins that can be staked (frozen) later. Without blocked tokens, it will be impossible to mine Ethereum and receive rewards in PoS. All the equipment currently used for PoW mining will become useless at the beginning of next year.

At the moment, the market met the news about the readiness of migration to the PoS algorithm with restrained optimism, and the price of ETH has risen insignificantly: