The world’s second most popular cryptocurrency, ether, is about to switch to a new, greener operating model.
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Currently, for its “mining” it consumes the same amount of energy as a medium-sized country. For example, the Ethereum Foundation said that the platform consumed as much electricity as the Netherlands in June.
Now, what is known as “the meltdown” will see its carbon emissions reduced by 99.9%.
Although cryptocurrencies have been a revolution in the world of the economy, their contribution to climate change is unfortunate due to the amount of electricity used by the computers that manage their trading.
The plan to switch to the new model, says Vitalik Buterin, co-founder of Ethereum (the digital platform whose currency is ether), was on the horizon since the cryptocurrency was launched in 2014, but has been postponed due to the technical complexity involved.
It’s kind of like rebuilding the foundations of a skyscraper while it’s still standing.
The change is expected to be completed during the early hours of this Thursday.
If something goes wrong, it could jeopardize possibly the most important cryptocurrency ecosystem, impacting investors large and small around the world. If all goes well, consumers shouldn’t notice any changes.
why are cryptocurrencies so polluting?
Unlike traditional currencies, cryptocurrencies are a digital currency system where people make direct online payments to each other and where there is no such thing as a central bank. Instead, they are managed with what is known as a “blockchain”.
This “blockchain” is a decentralized global network of high-powered computers that allows the creation, or “mining,” of digital currencies.
And, until now, the model known as “proof of work” or PoW system was used.
The model works as follows: for A to make a transfer to B in cryptocurrencies, it sends a message to the network that joins other messages from other transactions. Together they make a “block” which is converted into a cryptographic code. In turn, each “miner” competes with others for trying to solve that code and they are rewarded for this work with new coins.
Once the operation is resolved, it is verified by other miners and the transaction is confirmed.
Beyond this complexity, the process requires a lot of calculations and a lot of computer time. Therefore, a lot of electricity use.
how ethereum is changing to be more ecological
What will change from now on is that the PoW system blockchain will be merged (what they have called The Merge or “the merger”), with a carbon copy called the Beacon Chain. Behind this name appears a new coding system for the cryptocurrencies of the Ethereum system: the “proof of stake” (proof of participation) or PoS system.
The PoS system greatly reduces the number of computers needed to maintain the blockchain. The crypto miners are replaced by a smaller number of “validators” of the transaction.
In addition to reducing the energy load of Ethereum, the PoS system reduces the amount of coins given as rewards (which is how digital currencies are generated) and the organizers say that it will decrease the total amount of existing currencies.
Another change is that laptops and desktops can be used with this system, instead of the powerful GPUs (data processing units) that were used until now.
Going to proof-of-stake will reduce power consumption by about 112 terawatt hours per year to 0.01 terawatt hours per year.
a clean face and increased value
Those who defend cryptocurrencies always find a great stumbling block: the monstrous energy consumption they entail.
In the case of Ethereum, with “the merger” and the change in the mining system, the hope they have is that this will be sustainable in the future and more energy efficient.