2022 was a difficult year for cryptocurrencies and other digital assets, with markets generally performing poorly, the collapse of terra luna, job cuts at almost all major exchanges, the bankruptcy of crypto hedge fund Three Arrows Capital and lending platform Celsius Network, and the stupendous collapse of FTX. On the positive side, the major blockchain Ethereum transitioned to proof-of-state consensus mechanism, officially reducing the energy consumption of the blockchain by ~99.95 %.
What was the Merge?
Technically, the Merge was the joining of the original layer of Ethereum with a new layer, called the Beacon Chain. This merger introduced the new proof-of-stake consensus mechanism to the blockchain, depreciating the initial proof-of-work consensus mechanism.
© Stiftung Ethereum; https://ethereum.org/en/upgrades/merge/
What is proof-of-stake?
A blockchain is a distributed database and requires a consensus mechanism to determine entries into it. Proof-of-stake (PoS) and proof-of-work (PoW) are two mechanisms used in various blockchains. Until the Merge, PoW was used by the…