What does it mean for crypto?

• Ethereum’s long-awaited Merge has finally arrived.
• The merger will take ethereum from proof-of-work to proof-of-stake verifications.
• Insider asked 15 crypto founders and CEOs how the merger will affect the broader crypto ecosystem

According to Vitalik Buterin, Ethereum’s Merge is finally here.

The merger will transition Ethereum’s blockchain from a proof-of-work (PoW) verification system to add new blocks to a proof-of-stake (PoS) system. The most immediate consequence of this transition is that Ethereum rewards, paid out in its cryptocurrency ether, will no longer go to miners – instead, Ethereum will reward stakers who confirm transactions on the blockchain.

Switching to PoS will greatly reduce Ethereum’s environmental costs – reportedly by 99% – thus ridding the blockchain network of one of its biggest criticisms. But some critics say the merger will lower Ethereum’s network security, and that moving to proof-of-stake goes against the philosophy of many cryptocurrencies.

Both cryptocurrency enthusiasts and investors are wondering how the merger will affect the price of ether. Ether, much like the rest of the broader crypto market, has contracted a lot from its high of $4,770 last November. After Ethereum developer Tim Beiko announced the merger back in July of this year, ether has had bursts of bullishness – rising from roughly $1,100 to a peak of nearly $2,000 in August – followed by corrections. At the time of writing, the price of Ether is approximately $1,580.

To gauge how the merger will affect the future of crypto, Insider asked 15 crypto experts, ranging from CEOs of companies like Binance to long-term blockchain advocates like Dr. Adam Back, for their thoughts on the merger. While some of the experts were positive about the merger, others see this as a step away from the ethos of crypto – but all agree that the merger will bring big changes to the crypto ecosystem.

What the Ethereum Merger Means for Crypto

Hi Ico-founder of Binance and head of Binance Labs

Infrastructure remains a bottleneck in the crypto industry. The Ethereum merger is a brave effort to lay the foundation for Web3’s scalability and sustainability. It also provides the security needed to reach mass adoption. Although there is still much work to be done to deliver larger scale, the merger will allow Ethereum to make significant progress by moving to a proof-of-stake consensus mechanism. This is a great foundation for developers to build on. The future is built through constant efforts to iterate and evolve.

Anatoly Yakovenko, co-founder of Solana Labs

The merge does not address scalability at all. It’s not going to make the chain cheaper, faster, but it’s awesome that they’re moving towards proof-of-stake because I think proof-of-work takes a lot more energy just to provide security for the chain than anyone will ever need. It [proof-of-work] is just so energy-intensive that I think as an engineer it hurts me, it hurts my soul to see it run. I think they are not environmentally sustainable in any way. So I’m really excited about that aspect.

I think what’s really important about the merger is that it will kind of kill those conversations that proof of stake is somewhat less secure. There is still a lot of talk about it.

When I talk to people about NFTs, and things like that, I still have to spend 30 minutes explaining to them that there is a difference between proof-of-work and proof-of-stake, and that the NFTs on solana are green . All these talks will finally be put to rest.

So I’m excited about the space overall – we basically want everything, except for one chain [Bitcoin]blockchains that are proof-of-stake-based.

Dr. Adam Back, co-founder and CEO of Blockstream

I think if you look at gold as a historical example, and consider why people chose gold as money, it’s basically because it was scarce, durable, et cetera. For it to be small, it will itself have an unavoidable production cost. It would take actual work to get it off the ground. So if you think about it from that point of view, gold is a proof-of-work system. The only way to get more gold is to dig it up and refine it. So you say that with Bitcoin, so you know, proof-of-stake is like: well, we don’t like to work, how about our friends and us get together and issue tokens, pre-mine a bunch of them, and we adjusts the system.

So it’s really more like a private company or something that issues shares. To me, it is quite unlikely to be considered as the basis for a global currency or hard money. It is actually just copying a company organized by shares, but without the authorities and accounting and transparency obligations of a company. So you get the worst of the worst of it.

So you get the kind of moral hazard phenomenon that prints money but with no oversight and no professionalism involved.

Avery Akkineni, president of Vayner3

The merger will be the evolution of Ethereum that we have all predicted. We are excited to witness this transformation: further decentralization, increased stability and, most importantly, a reduced burden on power consumption and mother nature will certainly expand the ability for organizations to strategically consider Web3 applications.

The merger will help to overcome one of our biggest challenges in the old system. The PoS protocol that ETH 2.0 uses allows it to be infinitely more environmentally friendly and drastically reduces Web3’s carbon footprint now and in the future.

Yat Siuco-founder and managing chairman of Animoca Brands

The Merge is a victory for crypto, a victory for decentralization and everything web3 stands for. It may feel like there isn’t much we can agree on in the community, but the successful Merge proves that we can come together, build consensus and trust to accomplish something big. This went smoother than Y2K (shows my age).

John Wupresident of Ava Labs

As an operator in this space, I am rooting for the merger as the success of the event will create more awareness and adoption for blockchain technology. In a multi-chain future, this helps all Layer-1s grow this space together.

Will Szamosszegi, founder and CEO of Sazmining

Ethereum is already dangerously centralized: as of August, over 57% of ether was staked by just four sources. The transition to PoS will only strengthen this trend. Without decentralization, the protocol will always be vulnerable to attacks or unwanted changes.

Nikos AndriogiannopoulosCEO of Metrika

This third upgrade will provide the Ethereum community with a faster, more efficient and reliable blockchain that will help integrate the next billion users to Web3.

Just as we saw in the telecommunications space, advanced analytics will be needed to provide insight into the underlying health of the Ethereum network and its performance to encourage this mass adoption.

Greg BeardCEO of Stronghold Digital Mining

Ethereum Merge is a meaningful blockchain experiment and a noble approach to reducing industry energy consumption. However, the merger would effectively move the system away from decentralization, making a significant security sacrifice. The ETH blockchain will branch, with some miners continuing to work on PoW, while others will operate on PoS.

Bitcoin’s decentralized nature is what provides the network security that investors and users demand, so Bitcoin is unlikely to follow suit. However, the industry continues to make progress in improving energy efficiency and working towards cleaner energy, as regulators continue to pressure the industry at large.

Marshall Hayner, CEO of Metal Pay

It is always an advantage for the industry when a major player like Ethereum takes steps to become more sustainable, scalable and interoperable. However, the merger still does not solve the problem of blockchain silos, and the existing solutions to bring them together are clumsy and vulnerable to hacking. Beyond the merger, we need intra-blockchain communication that brings popular proof of cryptocurrencies like BTC, ETH, and DOGE to a proof-of-stake consensus so they can interact seamlessly and accelerate transactions and market adoption.

Jason Lau, CEO of OkCoin

Given that the broader crypto markets are stuck in headwinds with a short-term lack of catalytic factors, the merger has become the industry’s focal point. While it is a drastic change for ETH miners, and some developers have been waiting years for this, in reality the merger has no practical benefits for average end users. Potential price fluctuations notwithstanding, retail users won’t notice any differences after merging.

Kosala Hemachandra, founder and CEO of MyEtherWallet

.The current upgrade easily eliminates miners and allows validators to prove their blocks. Although the merger will not add any additional features to the Ethereum chain or cause any significant differences for users, I believe that in the next couple of years we will see Ethereum implement various new features and solve issues such as scalability. This will definitely bring more developers and users to the Ethereum ecosystem.

Andy Brombergco-founder of Coinlist and CEO of Eco

The merger is a massive change for the space, creating the largest proof-of-stake blockchain and influencing how products are built on top of the largest smart contract platform. How this change is received will likely dictate much of the next few years of innovation in the chain.

Stani Kulechov, founder and CEO of AAVE

I’ve been waiting for this for years so I’m pretty excited for the event and it’s definitely a big transition. There’s some kind of value at stake at the moment, and what’s also fascinating to me is that now you’re reducing the need for the Ethereum network by focusing on mining with electricity and efficiently using capital as a way to confirm and validate transactions.

This doesn’t just mean you’ll see availability – now you don’t have to have specific hardware to be able to validate transactions, you can actually join a specific pool or start validating yourself, so it democratizes it [Ethereum rewards] little more. The availability to validate Ethereum transactions I think is very valuable. At the same time, it also means that much of the Ethereum sitting on protocols like AAVE can be lent out to effectively support that Ethereum venture.

I think it’s fantastic for the DeFi ecosystem because Ethereum is effectively cheaper by the DeFi protocols and it’s being lent out from there.

So you can stake ETH while using it as collateral in the AAVE protocol and unlock liquidity.

Kirill Gertman, co-founder and CEO of Conduit

Despite having no strict hierarchy overseeing its development, Ethereum was able to transition to a new system seamlessly, reducing global electricity consumption by 0.2% overnight. This tremendous achievement is a testament to the flexibility and power of decentralization.