Sunday, December 10, 2023

Ethereum network to witness one of the most crucial software upgrades in crypto.

The crypto market will soon see the most significant software upgrades through the Ethereum network. It will switch from proof-of-work (PoW) to the proof-of-stake (PoS) consensus after the “merge”. Bitwise Asset Management has touted this as the year’s most compelling story in the digital asset industry.

The upgrade, in other words, “the merge”, will reduce Ethereum’s energy consumption. It will make Ether, which is Ethereum’s native token, more scarce and allow stakeholders to earn more yield. But it’s not going to be easy as there are risks. Matt Hougan, the chief investment officer at Bitwise, described the merge as a high-stakes, highly complex upgrade to the core blockchain that is already protecting more than $300 billion in assets. There are significant risks.

The long-anticipated merge is expected to bring lower costs and speedier transactions on the blockchain. But it has seen a series of delays giving way to competitors to take up the market share. Tim Beiko, the Ethereum developer, said last week that the upgrade wouldn’t happen in June as expected. It would come about a few months later. Hougan said more delays could be on the cards. He highlighted complex software launches are often delayed and the same was with Ethereum’s merge.

Hougan pointed out that PoS systems are more complex than PoW systems. As such, the process might not be free of glitches despite being well tested. There is the opportunity or the possibility of unintentional bugs or exploits being introduced into the Ethereum blockchain as it goes through an upgrade in the transition. Hougan shared that he has seen other blockchains stumble when it comes to big upgrades. The same happening in Ethereum cannot be ruled out completely.

The PoS consensus mechanism is not battle-tested as PoW, so the risk is very much there. Most blockchains are comfortable with PoW as it has been around for dozens of years and stored more than a trillion dollars in assets. PoW compared to PoS is a well-proven system.

Cryptured Team
Cryptured Team
The writers team at is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.

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