energy crisis
Ethereum blockchain switched to energy-saving process
Cryptocurrency systems like Bitcoin and Ethereum consume vast amounts of electricity because they rely on an energy-hungry back-up process. At least the Ethereum community is now daring to switch to an environmentally friendly system. photo
© Jens Kalaene/dpa-Zentralbild/dpa
Bitcoin and other cryptocurrencies are under constant criticism because of their huge power requirements. The second most important crypto system Ethereum has now taken a turn. This dramatically reduces energy consumption.
The second most important cyber currency, Ethereum, after the cryptocurrency Bitcoin, switched to energy-saving operation with a comprehensive software update on Thursday. According to the Ethereum Foundation, the conversion of the security procedure for transactions on the Ethereum blockchain will reduce electricity consumption by 99.95 percent.
The Ethereum blockchain is a publicly viewable database that stores and verifies information and transactions in a cryptographically secure manner. Ether is the cryptocurrency exchanged on the Ethereum blockchain. It ranks second in the crypto world behind Bitcoin in terms of overall value.
Energy consuming cryptographic puzzles
In order to validate transactions on the blockchain in a forgery-proof manner, the “Proof of Work” procedure was used with Ethereum – as with Bitcoin. Complicated cryptographic puzzles have to be solved and a lot of electricity is consumed. Ethereum has now switched to the “Proof of Stake” (PoS) process with the “merge”, which only consumes a fraction of the electricity.
In this alternative consensus process, crypto investors deposit a certain number of digital coins to participate in a kind of lottery. Each time a transaction needs to be validated, a participant (“staker”) is selected from the raffle pot to verify the exchange and receive new coins as a reward.
Fewer conversion refusers than assumed
Not all players who have previously operated the Ethereum blockchain as “miners” have participated in the changeover. A spokesman for the Ethereum Foundation explained in a live broadcast of the “The Merge” event that the proportion of conversion refusers was much lower than feared.
The crypto industry is now eagerly awaiting how the exchange rate of the Ethereum coin Ether will develop against the US dollar and other conventional currencies after the “merge”. Immediately before and after the changeover, most exchanges had suspended trading in ether.
Scientific service of the Bundestag on the energy requirements of cryptocurrencies Alex de Vries on the power consumption of Ethereum Portrait of Vitalik Buterin on Blockchain-Kompass.de Live broadcast of the Ethereum Foundation on YouTube