How will the new “upgrade” of the Ethereum cryptocurrency work in 2022?

Financial Newspaper – Santiago

The second-largest digital currency in the market, Ethereum, led the crypto market higher this week as traders grow more optimistic about the new “upgrade” that promises to reduce its carbon footprint.

Like Bitcoin, the currency currently uses the Proof-of-Work (PoW) mining system, one of the most criticized for its environmental impact. However, during the last few years, several efforts have been made to transition to Proof-of-Stake (PoS), an alternative that consumes less power and would be more efficient.

“This merger marks the culmination of six years of research and development on Ethereum and will result in a more secure network, predictable block times, and over 99.98% reduction in power usage when released onto the mainnet.” later in 2022,” the Ethereum Foundation initially noted.

For the CEO of LatamTech Finance, Cristóbal Pereira, there are two big changes: computer equipment or “miners” will no longer be necessary to build the blocks, and a greater number of transactions per second, since it would go from processing 20 transactions per second to more of 100 thousand.

“We are going to continue using the same Ethereum network, wallets, assets and applications. More than anything, it is a change at the infrastructure level, because the big change is that the ‘miners’ stop working and become validators”, he explains.

The last test of the new software prior to the merger of both systems began on March 15 and, despite registering some initial failures, the problems would already be solved and it could be released in the coming months.

For the same reason, the price of the cryptocurrency has soared in the last week by 12.8% to US$3,177.96, while Bitcoin has risen 9.3% to US$44,901.13, according to CoinGecko.

“This will bring a lot of improvement to Ethereum, since it will allow a much larger ecosystem to be built. Also, the cost of the transactions will be much cheaper”, concludes Pereira, indicating that it could even reach US$ 10,000 in the next five years.