Ethereum is starting a new chapter in its token life. It is currently gearing up to transition from a proof of work to a proof stake change for the token. Now what does this all mean? Will this be harmful or beneficial to Ethereum and the blockchain? What does proof of work and proof of stake mean? Lets dive into the bits and bytes of the Ethereum world.

Ethereum and its History

Ethereum started as a concept-vision by Vitalik Buterin in 2013 when the first whitepaper was released to the general public. The yellow paper or technical analysis of the token technology was released the following year in 2014 by Dr. Gavin Wood defined the technical protocol of the token. Ether officially went on sale later that same year and could be purchased with the use of bitcoin. In 2015 the token started allowing miners to work through the Ethereum protocol and blockchain to earn more Ethereum tokens. This concept is similar to how miners complete complex math problems and algorithms to mine for bitcoins. Back in 2015 after the mining operations went live for the first time, the price of Ethereum was $1.24 per token. In order to understand how Ethereum got to where it is today, we must understand the Homestead fork in 2016 when Ethereum was $12.50 per token.

Forking Upgrades

The Homestead fork initiated several protocols and upgrades that allowed for future upgrades to be implemented into the network. It gave room on the blockchain to allow for the token and the Ethereum blockchain to grow as times progressed. Over the course of 2015 and 2016, several more forks and protocols were added to bolster security on the blockchain that allows it to be one of the safest blockchains on the market. Another critical fork was the Byzantium fork in 2017. This fork is the protocol built off the homestead fork to allow for the Layer 2 network upgrade to begin. In laymen’s terms, the Layer 2 upgrade that is launching to change Ethereum from proof of work to proof of stake was initiated back in 2017. If this fork did not work, the Layer 2 scaling and upgrade would not be possible. Our last bit of history and guts about the Ethereum blockchain is in regards to the Beacon fork in 2020. This fork started processing staked Eth to allow for the proof of stake to be valid. When it completed these transactions, the Ethereum blockchain proved December 1^st 2020, that it could handle the merge. Current price of Ethereum at this point was $586.23, marking a 25,361% gain since initial offering. The Ethereum blockchain is going under final updates to complete the merge by September 15^th/16^th. Now let’s answer our next question, what is proof of work and proof of stake.

Proof of Work vs Proof of Stake

Proof of work describes how a blockchain functions and the transactions execute. It is a way to validate transactions and peer to peer transactions without a third party. You pay a fee or gas for each transaction. The fee fluctuates depending on variables such as time of day or how many transactions. This consensus mechanism burns high amounts of energy that increases as more people use the network via mining. Proof of stake is a mechanism that requires investors to hold or stake tokens. If there is an attack on the blockchain, it is secured so it is not advantageous to the attacker t. Owners of the token can validate the transaction themselves based on the tokens they stake. This allows for a controlled feeling for the investor. They can validate the transaction similar to how you validate bank transactions. This mechanism also requires 99% less energy than proof of work. What does this all mean for the future?

Ethereum Merging to the Future?

The merge is expected to conclude or go live on September 15^th/16^th , 2022, depending on the final blockchain validation from proof of work to proof of stake. Proof of stake will help make Ethereum and its blockchain more scalable for future upgrades as well as environmentally friendly. For proof of stake to be seen as a success by investors or tech enthusiasts, it will have to hit the main points of its upgrade. Proof of stake is also seen as an inflationary hedge to make the tokens on that blockchain deflationary. This means as the token supply continues to deplete, the scarcity of the token will push the value higher. Essentially, it comes down to the technical world that is the heart of cryptocurrency and that is the blockchain tech.

Soaking it all in

It seems like the merge could be a beneficial boost to Ethereum and other tokens that utilize the Ethereum blockchain. If history is any indication, then the Ethereum blockchain will continue to climb to higher heights. As always though, it is still possible that this may not work, which why it seen as speculative upgrade. Ethereum is the first of its kind to do something on this scale. Another token, Shiba Inu is planning something called Shibarium. It is necessary for each reader to understand they are their own masterminds of investing. We here at Crypto Christ may give facts and viewpoints but never endorse or persuade one investment over another. Coinbase as of today 9/8/2022, has 77.6% of its investors buying and 22.4% selling.