Understanding the Ethereum Merge: Key Insights and Implications

hello everyone if you are using blockchain or if you are you know investing in crypto then unless you have

been living under a rock for the past few days you would have heard about the ethereum merge and so in this video we

will talk about everything that you should know about the ethereum merge especially if you are invested in

ethereum or any of the ethereum assets for that matter and the usual disclaimer and morning I'm

not a financial advisor or investment expert all the videos that I make are for sharing my learning and the process

you make your own decisions based on your own research and do not trust people who call themselves as

professional workers or investment advisors most of these people are scammers and you need to be very careful

with your Investments especially when dealing with these kind of scammers who cause and surface online Brokers or

investment devices um I am actively tweeting on my Twitter account at the rate Channel and and you

can follow um active handles that I am following on Twitter to get up-to-date information on

many of these topics so what is the ethereum merge first of all ethereum is currently one of the largest blockchain

networks in the world and it's running um using the the gas fees as ethereum token eth and currently it's operating

on proof of work protocol and it is moving to proof of stake consistency algorithm and in episode 43 I had

explained the reference between what is proof of work and what is proof of stake in detail and why ethereum blockchain is

moving to proof of step in the first place this proof of stake move to the proof of stake is called as the merge

process and ethereum merge is probably the biggest blockchain event of this decade it is a very important event that

is happening in the in the entire blockchain world and all eyes are pretty much focused on the next few days when

the ethereum merge is going to happen so why is it called the merge in the first place

again as I had explained in episode 43 the ethereum proof of stake is already running parallel on a chain called as

the beacon chain even though it is not actively validating transactions there is a parallel chain called as the beacon

chain which has been running for more than a year which is working on the proof of stake concept a proof of State

consensus algorithm now the merge is the event where the current active proof of work chain merges with this Beacon chain

and it becomes a single chain which is the energy efficient proof of stake change so after the merge event these

two chains will merge into one single blockchain which is now going to be the future ethereum blockchain and this

merging process and this proof of stake new chain will also pave the way for Fusion enhancements like the sharding

for example and much more and sharding for example is a is a concept that enhances the capability of the

blockchain after the merge has been successful it has been planned for somewhere in the future near 2023 and

you can know more details about it technically sharding and all the other future events warrant a complete

separate video so I'm going to explain that in this video when is the merge going to happen so the merge is expected

to happen on the 50 in September somewhere around 7 AM India time it's expected to start at that point in fact

if you Google for ethereum merge right now Google actually has started a countdown clock and it shows you how

important this event is from the blockchain perspective now just blockchain but in general it has got

huge implications first of all you know how difficult is this merge and why are we talking about

it why is it so difficult because the merge is probably the most incredibly complex attempts ever made in blockchain

so far and the Immunology that the ethereum developers have given and have just borrowed it is that the beacon

chain think of it like a new engine of a spaceship which is already in space and running and the spaceship being ethereum

so we are replacing the old engine which is the proof of work algorithm proof of work protocol with this new engine which

is the POS Beacon chain concept the proof of stake right so what is complex in this whole process is there's going

to be a hot swap meaning the spaceship is going full velocity and we are changing the engine uh without stopping

the spaceship when it's actually going ahead full stream and you know think about it when a car is going in full

speed or a bus is going in full speed and you try to change a a tire when the car is still moving let alone attire and

then think about changing an engine and then think about changing a spaceship for example it's that complex

so what should you do because primarily the question that everybody will ask before we jump into more details is as a

holder of ethereum you know I have ethereum in a centralized exchange like for ZX I have ethereum in a in a D5

wallet like metamask what should I do the answer is simple is actually nothing you know ethereum or and all the

developers have stated multiple times that if you are a holder of ethereum or any other digital wallet any

ethereum based token like erc20 based token as a non-node staking operator like a normal person who's just holding

the funds in the wallet you do not need to do anything in fact don't do anything this is the best advice that they're

giving and even after the merge you don't need to do anything you will not notice it in fact it will be it should

be transparent to you if everything goes smooth so be on high alert for people who are trying to scam saying that you

know click here to get the upgrade to ethereum to click here to get your ethereum upgraded to the eth2 Token for

example none of this is true you do not need to do anything you don't need to send your funds anywhere people are

going to be trying to scam others um by by you know going for their ignorance and trying to take their funds

during this process that's the best thing that's that's the worst thing that's going to happen

so there are some essential misconceptions on the merge a lot of talk a lot of rumors have gone ahead in

fact a lot of mainstream media has even published some of these rumors and misconceptions you know uh common

misconception being reduced cash fees you know transactions will be much faster and as a consequence we don't

need L to change for example if you're invested in tokens like polygon Matic you know you would not need L to change

after the ethereum merge so what is the reality the reality is that especially on the reduced cash fees and

transactions will be faster it's completely false the merge is basically a change of the consensus mechanism

we're just going moving from proof of work to proof of stake there is no expansion of network capacity or upgrade

in in any other way and this will also means that there is no going to be any resultant lower gas fees or faster

transactions or Improvement in ah the speed I mean there will be a 10 percent expected overall efficiency Improvement

but as an end user you will have hardly see any Improvement in speed that is again going to be dependent on the

network congestion and the network usage that we have always seen so if anything the L2 chains are going to benefit much

more from this merge process because technically it's going to be much more easier for them going forward because

there will be a single chain operating so so this is one of the commonly asked

questions of these three four points or the common misconceptions because they have been quoted in news media as well

several times incorrectly but if you actually go to ethereum.org and read their own updates you will see that this

is what they have stated exactly so there is also a concept called Shanghai upgrade which you might have heard if

you are watching the news or if you've read the news shanga upgrade is the ability to withdraw from the ethereum

staking so if you watched my episode 43 we talked about the fact that after the beacon chain merges with the main chain

there is going to be an unstaking ability for people who have already staked into the beacon chain leaders

taking for example and validator nodes but that unstaking is not immediately coming with the merge that's going to

happen at a future Point somewhere in 2023 where the Shanghai or probably earlier after the merge happens through

another upgrade called as the Shanghai upgrade so there are subsequent ah blockchain events that are going to

happen which are less significant from a technology standpoint but probably more significant from a an individual or

investor standpoint because like you know if you have staked into ethereum you will not still not be able to

unstake it with just as much alone there are future events that are coming into perspective now what is the biggest

benefit why do all of this if it's going to be this incredibly complex right so the biggest benefit

um obviously other than the enhancements of sharding and monetary benefits is that energy consumption the proof of

stake the merge into proof of stake is expected to reduce the energy consumption by 99.95 percent the proof

of stake is expected to be 2000 times more energy efficient than proof of work so to put it into perspective the total

energy consumption of ethereum network is about 112 terawatt hour which is comparable to the total energy

consumption of Netherlands as a country for the year and the carbon emission is equal into about 53 metric tons which is

equivalent to the carbon emission of a country like Singapore for example so after the energy consumption I mean

after the merge the energy consumption is expected reduced to about 0.01 terawatt per hour that is an enormous

reduction in energy consumption with regards to how the ethereum network is going to operate in the future and which

makes it which is going to make it one of the greenest blockchains comparable to almost all the new uh L1 blockchains

which have started up with the proof of stick for example so ethereum is leading the way in terms of you know showing how

blockchain can operate in a much more energy efficient way so what is the uh the risk of failure

right so uh this is an unknown territory at this point because despite all the complexity and despite all the uh test

net uh merge runs that have happened have shown that uh you know everything uh when when this fully plan can be

fully successful and also the brightest minds are working on it and and so the the expectation is that the merge will

succeed however there are two scenarios possible one is the scenario a where everything goes well you will hardly

even notice that there has been a merge that has happened or a move to the proof of stake because like I said if you're

holding your tokens on centralized exchanges or D5 wallet you wake up in the morning everything will look exactly

the same you will notice nothing new about the blockchain it will still be performing the same levels as before

right so that is scenario a and scenario B is uh you know in case the the merge hasn't been successful the chain could

split in two chains and you will have two competing ethereum blockchains being created so one is the the merged chain

ah and one is the another is the new proof of work chain which could have a token called ethw for example which is

going to continue operating as a new proof of work blockchain Ethiopian blockchain and the existing ethereum

chain will then become a merged proof of State Network one way or the other we are going to get an ethereum proof of

stake blockchain but the question is in the scenario B whether or not there is a split that is going to create a a new

proof of work blockchain called as ethereum with the token codeless ethereum W now the scenario B is a

complete or known and you cannot prepare for that uh you have to basically phase it like an emergency strategy it's like

a fire you know how much hour you prepare for a fire drill when an actual fire happens you know the the fire fight

is real and the scenario is pretty much going to be a firefight if it happens it's going to be like a real fire where

in emergency strategies are going to be thrown in depending upon how much the fire is Raging and there is a

possibility that if that scenario B can be controlled within a few hours then the new chain will not be permanent and

you will still not notice it can still go back and become a scenario okay so it's how quickly the fire can be put out

in case of a scenario B but um you will know if the scenario B has happened practically everybody will be

shouting about it and you will know if scenario a has happened nobody will talk about it nothing would have happened and

and things would have been normal so that's how you will know what has happened at the end of the merch I will

also be tweeting about it so what can you do in there in the end what can you do as an end user right so

avoid using ethereum on chain transaction so do not send ethereum from one wallet to another do not try to

withdraw from centralized exchange to decent plus exchange do not try to move funds from one bullet to another do not

try and do D5 transactions on the ethereum network or even the polygon Network for that matter because we know

that sometimes these ethereum transactions can take hours depending upon the congestion and you do not want

an active transaction on the blockchain when the merge is happening so pretty much avoid even though there is going to

be zero downtime pretty much avoid doing on chain transactions and also I would always discourage leverage training I've

always discouraged it in my ah in my Channel all the time but especially this time do not try and not do leverage

trading on ethereum or any volatile ethereum assets at this point because there could be a massive swing on

liquidation possibility and do not fall victim to scams promising like ethereum two tokens or you know uh promising to

give you a promising to you know help you with the merge process and tricking you into giving your private keys or

control of your account or account details for that matter so and finally last but not the least you know share

this information with people that you know who are in the blockchain and in the crypto space and who may not be

following um these kind of information blogs on this kind of information channels but

um so that they do not get tricked into into any of these scams for that matter right so that's probably the best that

we can do at this point hopefully this was helpful to you thank you