September 26, 2022

The Ethereum merger is creating factions within the community as opinions abound about the direction of a potential fork.

A group, led by a Chinese miner, is proposing a fork to preserve the current consensus mechanism known as proof-of-work. A fork is a substantial change in the software of a blockchain network that renders previous transactions or blocks of transactions valid, or vice versa.

The merger, scheduled for September or October of this year, will change the consensus layer of the Ethereum protocol from proof-of-work to proof-of-stake, which some claim will reduce Ethereum’s energy footprint by 99%.

Proceed with caution

A fork was predicted by hedge fund Galois Capital, whose founder and CEO Kevin Zhou predicted the collapse of stablecoin TerraUSD.

One initiative, EthereumPOW, is led by a semi-retired Chinese miner Hongcai Guo, who has received requests from Chinese companies to start the fork efforts. Guo has claimed that people will get free money when the fork happens. About 60 developers are working on the fork to defuse the so-called difficulty bomb in the existing Ethereum code.

The difficulty bomb is designed to make Ethereum mining nearly impossible as the transition approaches. Ethereum developers announced a bombshell delay in early June.

Proceed with caution, they say analysts. They say the fork is often plagued by a lack of commitment from app developers and users.

A director at analytics firm Messari says efforts so far have been short-sighted at best, focusing only on a potential new token without considering how the new network will be supported in the long term.

However, Ethereum co-founder Vitalik Buterin said on Saturday that he does not expect any fork to significantly damage the Ethereum network.

Companies weigh in, split opinions

Institutional mining company Hive Blockchain Technologies Ltd. stated that it may return to mining Ethereum Classic, the predecessor of the current Ethereum network. An employee of Flexpool, a company that allows smaller miners to mine Ethereum, said the company will support whatever makes it money. He added that a new fork would likely need the backing of a reputable entity to succeed, as cryptocurrencies and tokens have little intrinsic value beyond speculation.

Taylor Monahan, chief product officer at Metamask, a company that builds an eponymous custodial-free crypto wallet, said the fork will happen if it’s profitable for an entity. Metamask initially said it would not support Ethereum Classic when Ethereum launched in 2016, but soon changed its mind.

Justin Sun, the controversial entrepreneur behind the Tron blockchain that recently launched a stablecoin, said that cryptocurrency exchange Poloniex would support all Ethereum proof-of-work tokens.

Buterin added that he doesn’t think the forks will boost long-term adoption. Future development, he believes, should strengthen Ethereum’s cryptographic foundation to fend off the threats posed by quantum computers.

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