Ethereum’s Vitalik Buterin on the success of The Merge

The switch from Proof of Work to Proof of Stake was planned as the event of the century for the cryptocurrency community, and in just over a month since The Merge, has already resulted in massive transformations to the digital currency landscape in terms of increased scalability and reduced environmental impact . As Buterin explained, “Proof of Work relies on a bunch of miners running calculations on specialized hardware costing millions of dollars 24/7.”

Proof of Work had many critics. Buterin continued: “It’s not as safe as it could be. It has problems with centralized. It requires a significant amount of issuance to continue to function, and it has this pretty significant environmental problem because of all the electricity that’s consumed and all the hardware that’s quickly consumed and destroyed by this process of running hardware to do calculations 24/7.

After a two-year testing period, Buterin explained that Proof of Stake is more secure due to the increased number of validators that secure the Ethereum network as part of an ongoing agreement across existing blocks and when new blocks are created.

These validators by the thousands create what are referred to as “appended stations” and place “confirmation messages” on each block in parallel. “A block has a very high degree of security, even just for a few seconds after it is published. We can actually see this in the data, Buterin said.

Furthermore, estimates have suggested that post-merger Ethereum uses approximately 99.95% less electricity than it did before the merge. The consumption that was previously fair with a small country’s electricity consumption “disappeared” overnight.

Economic exclusion is also a cause for concern. Buterin mentioned that “the reality is that there are eight billion people in the world, and most of them do not use blockchain. Even those who use cryptocurrencies do not do so through blockchain today.”

He added that while cryptocurrency penetration is high in countries like Argentina where the local currency is unstable and inflation is high, the risk of trading cryptocurrency through centralized intermediaries is not considered. “It’s a very unfortunate situation because you lose the benefits of choice, transparency, decentralized systems and open ledgers.”

Buterin explained: “The Ethereum Layer 1 blockchain itself focuses on being a stable and reliable system that tries to be as decentralized as possible, tries to be as robust as possible and leaves that to protocols like Rollups.” Rollups are one of several scaling systems, which are simply methods of making a slow blockchain faster and cheaper.

He continued: “Layer 2 systems can actually be open, permissionless, enhanced, decentralized and all these things that we expect from Layer 1. This is not the place for transactions where you need a theory and the protocol does complicated calculations on them. This is just a place where there is a lot of data.

“It’s up to these Layer 2 Rollup protocols to interpret that data and take advantage of it to actually create the scalable systems that deliver value to users.” In a closing statement, Buterin added that the long-term goal of Ethereum post-Merge is to move towards the theory that the base layer – Layer 1 – should be stable, reliable and change very little, similar to internet protocols today. However, this will take years.

The switch to Proof of Stake was the first really big change to Ethereum. It really shows that major improvements through the protocol that solve real problems that people have are possible, and these remaining problems are going to be worked on over the next few years.

“There were a large number of very smart people working on them, making sure that we have an amazing, scalable, secure, open protocol that has tools that allow people to protect the security of your accounts, to protect your privacy, and to improve the usability of users. These are the kinds of things that the Ethereum protocol and ecosystem development over the next five to 10 years will be working on.”