Ethereum (ETH) in 2023

Abstract: One of the most anticipated crypto occasions last year was the Ethereum Blockchain’s Merge. Completed on 15 September 2022, The Merge marked a significant step in the Ethereum blockchain’s transition to a proof-of-stake (PoS) consensus mechanism from proof-of-work (PoW). One of the positive effects of the shift was the decrease in Ethereum’s energy consumption. It is estimated that Ethereum’s energy consumption got reduced to a whopping 99.95%. Energy use for the Ethereum PoS blockchain is predicted to be hundreds of times less than that of PoW networks, or about 1% of PayPal.Ethereum blockchain no more requires the energy-intensive mining rigs of proof-of-work (PoW). PoS blockchain, in contrast, relies on validators to verify the transactions. However, the Merge did not materially alter how end users transacted on the Ethereum network from their point of view. For instance, the gas fees have not significantly changed since The Merge. Instead, The Merge prepares the ground for further improvements that will make the Ethereum blockchain more scalable.

Welcome to the Segment II of the Blockchain Blog Series titled, “Blockchain 2022 Review & What’s Next In 2023”. The idea of the series is to summarize the trends of blockchain that happened in 2022 and analyze what holds for the technology in credit for the future. By chance, if you have missed the first part of this series kindly refer to the same here. In the first part, we sneak a peek at the Macro Economy and Market Cycle predictions for Blockchain, and today we will stroll through the Ethereum updates that happened in the past and their implications for the future. So let’s get started.

Ethereum Merge & Future Blockchain Architecture

Ethereum, the world’s second most valuable cryptocurrency, completed a significant software overhaul last year. The newer switch of the consensus model now promises to assert the security of the coin, while claiming to cut down on its carbon footprint, nearly entirely. In 2023, the blockchain is to get a lot more fascinating. The Merge will cast aside the role of crypto miners and gigantic mining farms, who had previously driven the blockchain to now assign the ‘validators’ who randomly approve transactions and earn a small reward. This story might be already familiar to all blockchain enthusiasts, as the PoW and PoS adorn the fundamentals of Blockchain. However, it’s nowhere complete if we miss this part for this particular title. So here we go.

Then ’n’ Now

Transaction approvals on Ethereum Blockchain were earlier happening under the PoW consensus mechanism which was essentially carried out by miners. Miners would compete to solve challenging mathematical riddles using a massive infrastructure of cutting-edge computer hardware, and the first one to solve the puzzle would be chosen as the validator. However, this method was entirely dependent on crypto farms, which are massive warehouses lined with rows of computers. This often paved the way for criticisms that the crypto industry sometimes consumed more electricity than entire countries, forcing concerns over environmental sustainability.

Entering ‘The Merge’ Ethereum would not need miners and mining farms to authenticate transactions. Instead, a validator will be chosen at random from a group of individuals who have “staked” (basically, pledged at least 32 Ethereum tokens on the network) their money. As a result, the Ethereum network would no longer require any miners.

What’s Next In Ethereum?

With the consensus model shift, there are newer changes expected in Ethereum. At the Ethereum Community Conference held last year, Vitalik Buterin, Ethereum’s co-founder opinioned that post ‘The Merge’, the network will undergo further upgrades which he called the “surge,” “verge,” “purge,” and “splurge”.

Surge: This is a reference to the inclusion of Ethereum sharding, which promises to execute transactions on the network much more quickly than they do at the moment. Sharding generally refers to splitting up transactions into multiple chains to reduce fees and speed up transactions. Following the Merge, Ethereum is anticipated to be able to perform at least 100,000 transactions per second.

Verge: The verge will implement what Buterin called “Verkle trees” and “stateless clients,” which allow users on the network to become validators without having to store extensive amounts of data on their machines.

Purge: This stage will include deleting outdated network history, as the name implies. The purge aims to reduce the amount of space required on one’s hard disc, simplify the Ethereum protocol over time, and stop needing nodes to keep history, according to Buterin.

Splurge: “The fun thing,” as Buterin described this stage. It attempts to ensure that the network keeps operating smoothly and that the updates to the protocol in the previous sections do not cause any issues.

Since its debut in 2014, Ethereum has been the top blockchain platform for decentralized applications. Although there are other blockchains with various use cases and functionalities, none have seen anywhere near the level of adoption that the Ethereum blockchain has. As we progress in 2023, The Merge will include new capabilities that will make it easier for programmers to comprehend what is happening between their code and the EVM. It is also anticipated that Ethereum will focus on introducing new features to enable the development of decentralized applications simpler. The Ethereum Merge’s underlying technology is built with backward compatibility in mind. As a result, programmers who create applications using Ethereum’s current version should be able to transfer their code to the new network without having to make any modifications. Ethereum Merge also includes a steep increase in daily block creation and a substantial decrease in average block time.

Why is the ‘Merge’ important?

The development in Ethereum comes amid growing regulatory scrutiny over cryptocurrencies which have taken a severe beating in their value in the past few months. Said that “The Merge” will make transactions on the Ethereum network incredibly safe is one of the main advantages that have to be highlighted at the moment. As the Ethereum blockchain is a house to some of the most widely used cryptocurrency applications, including non-fungible tokens (NFTs) and decentralized finance (DeFi), the Merge, therefore, will have far-reaching consequences in the future and will definitely start reflecting from this 2023. Let’s wait for safer, more secure, and socially good blockchain applications paving the way to a sustainable future.

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