Ethereum Merge From the Perspective of Someone Vaguely Interested in Ethereum
Let's face it, Ethereum doesn't cater to me, and I am in a large category of people/small investors Ethereum doesn't cater to.
And that's fine. We don't want everything in the crypto space to be suitable for everyone. That's impossible and would be bad if such a thing would be constantly attempted. That's why I don't have a problem when Splinterlands comes out with products that are not meant for me.
Back to the Ethereum merge.
Ethereum - From Proof-of-Work (PoW) to Proof-of-Stake (PoS)
So, Ethereum has been trying to switch from the Proof-of-Work to Proof-of-Stake consensus mechanism since almost its launch (Ethereum was launched in 2016 and I heard early mentions of switching to PoS come from 2017).
That - together with their high transaction fees - have often been a subject of jokes regarding Ethereum.
It looks like tomorrow (the time isn't exact) this process may be finalized. Unless something goes wrong, of course. And I don't want that, because we've had enough of this saga.
Now, what is this Ethereum merge?
What Is Ethereum Merge?
Right now, Ethereum blockchain runs the mainnet on a PoW consensus, and there is a so-called Beacon chain that has been running in parallel as PoS for months. Currently, the PoW mainnet is the 'real' chain, the reference everyone points to as Ethereum.
When the merge happens the switch happens. The beacon chain - which is PoS - will become the mainnet for Ethereum. I assume the PoW chain will be abandoned, but I have no idea what will happen to it.
Will PoS be something good for Ethereum?
That remains to be seen. As PoS, Ethereum will definitely consume way less energy, which is the main point they are insisting upon. I believe what Ethereum had going on for itself has been security (of the transactions, not the smart contracts which introduce various risks). Will that be the same in PoS?
Ethereum was controlled directly or indirectly by 3 categories of entities in PoW:
In the PoS consensus mechanism, miners disappear as one of the controlling categories and stakers become very powerful instead. The remaining categories are:
- core devs
- major stakers
I'm curious to see in what direction development on Ethereum will turn with miners out of the way, and practically opening the gate wide open for entities with huge amounts of money to jump into controlling positions. This was still the case in the mining operations, but a different category of people was involved in mining. I don't see many Wall Street boys buying up mining operations.
This could be a great thing for the portfolios of people holding Ethereum, if it happens. But having Wall Street-type entities in control of Ethereum is not a great perspective, in my opinion.
There is of course the argument that it's less expensive to become a block producer in Ethereum PoS than it is in PoW. Maybe it is, but in PoS rewards are distributed proportionally with the stake.
On Hive, we have different mechanisms that can improve distribution. Like the Proof-of-Brain mechanism. Also, DPoS allows for people with not the highest stake to become top block producers through delegation. You won't have those on Ethereum.
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It is sacrificing security and is becoming more centralized.
Exchanges are becoming top holders of ETH for the staking, now you have a concentrated point of failure for attacks.
It also opens up the possibility of being controlled directly by the government.
Great point about exchanges becoming top holders of ETH. Of course, they need to stake it, but as we've seen in the case of Steem, they have no problems staking custodian funds. And Ethereum unstaking will likely be much quicker than 13 weeks. Plus, they have these options for customers to stake their ETH for some staking rewards. I'm sure even in this case they keep their cut, but what they have are control and influence and that's what they want even more.
Crypto was supposed to be decentralized, and it all turned out to be centralized overtime, for efficiency.
Centralization and PoS may evolve to be very similar to the corporations and banks we have today in many aspects.
When much has changed, more reverted back to the same.
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@yibbiy said: "It also opens up the possibility of being controlled directly by the government."
I haven't seen many people talking about this exact thing! There are floods of regulations coming and Etherium just made it easier.
Voted on ListNerds!
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Hive is still better. !HBIT
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Yeah, but it's kind of our secret. Many people focus on other things, including creating some things that are already possible on Hive.
I don't think PoS will be good for ETH because people flocked over there due to all the mining. Without all these miners, will the network even be able to stand up to the traffic? There is also the issue of PoS because Wall Street could control a large amount of the ETH and take control.
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That's an interesting question. Technically, there could be many more block producers than they were when Ethereum was PoW and it had miners. But that will be interesting to watch from the scalability POV. They say it's better for scalability perspectives. We'll see.
I'm eagerly waiting to see how this merge plays out.
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Not much time to wait now.
I think it's the beginning of the end for ETH but no idea how it will play out.
My interest in Ethereum is from the point of its ramifications, if it gets in trouble, or if it becomes the enforcer of random regulations. If Ethereum gets in trouble, all EVM chains are equally if not more in a bad position. BSC, Polygon, due to Leofinance, I am involved on both.
I dont know if it will get in trouble, but the interest to hold it is much less now compared to Bitcoin. What trouble could it get into? Do you know the fees once it has merged?
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Thanks for the great information. Never knew anything about PoW or PoS before.
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Well, bitcoin is PoW too.
If Ethereum is captured by centralized entities, (Tornado Cash BS) it will mean a big boon for their competitors, Hive as well with all the censorship intensifying. People are starting to understand the importance of decentralization from an irl pov if not technically. Polkadot ecosystem is doing some cool things.
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I'd have to say that before it will become an attraction point for competitors, it will be a big loss for the crypto industry because A LOT is revolving around Ethereum.
Haha I'm in the same boat as you.
Thanks for sharing your view on the merge from our perspective.
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I hope I didn't spoil the party for those on Hive who are really excited about this event.
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