Why September 15 will be an important day for Ethereum

Last Updated: 15 August 2022

Ethereum’s founder, Vitalik Buterin, said that on September 15, Ethereum will finally get its long-awaited update. This is four days earlier than expected. The timing of the update depends on the hashrate, but everything points to September 15th.

Ethereum target date depends on hashrate

How does Ethereum’s hashrate work? Fortunately, Buterin explains this himself on Twitter. He gives his 4.1 million Twitter followers a detailed technical overview of the computing power needed to complete the last block on Ethereum before The Merge.

Buterin expects The Merge to be executed on September 15, depending on the hashrate.

“The total difficulty of the terminal is set at 58750000000000000000000. This means that the Ethereum PoW network now has a (roughly) fixed number of hashes to mine.”

TTD indicates end of proof-of-work on Ethereum

That long number is the Total Terminal Difficulty (TTD) and indicates the end of proof-of-work and when proof-of-stake begins. The TTD is the total difficulty required for the last block to be mined before the transition to the execution of The Merge.

Hashrate measures the processing power of the Ethereum network. Blocks are “hashed” and added to the ETH blockchain while miners solve complex mathematical puzzles (guess a number) to confirm transactions. The hashrate indicates the number of times per second the network can attempt to guess the number. A higher hashrate means a more secure network against possible attackers.

First Bellatrix fork on Ethereum

Before The Merge can be completed, the Bellatrix fork that implements the software that clients need to run the consensus layer, must be run. This is scheduled for September 6, about 10 days before the major upgrade.

So right now, Ethereum, like Bitcoin, is using proof-of-work. Miners compete with each other to find a number as quickly as possible to earn crypto. This model encourages miners to use better and better machines. Instead of hoping for more efficient hardware and renewable energy, Ethereum changes the whole game by moving to proof-of-stake.

This makes miners and their equipment redundant, and requires much less energy. Good news for the world, bad news for miners.

Minimum 32 ether

Instead, all users with an internet connection, a device with sufficient CPU, and 32 ethers can become a node and secure the network. According to Ethereum, power is shifting back from miners to users who want to support the network rather than those looking for financial gain.

There is no longer a need to use large, expensive miners in proof-of-stake, so Ethereum expects power consumption and carbon footprint to reduce significantly. Instead, nodes use their ether as collateral to process transactions. The collateral must be at least 32 ETH, but they get a reward for this.

In a process called strike, users without 32 ETH can place their Ether in a pool to collectively validate transactions and earn rewards.

Ethereum imposes expensive penalties

We just talked about rewards for validating transactions. The reward and collateral can be taken away by the network, if the user behaves maliciously. Certain elements are also taken from proof-of-work, such as the possibility of carrying out a 51% attack. A malicious party must check an extremely large number of ethers to do this, and if the attack fails, the attacker has lost all his or her ether.

Another important reason for the switch is that the Ethereum network is simply becoming too expensive for normal users. During the 2021 bull run, transaction costs skyrocketed, and only a limited number of transactions could be made per second. The aim is to increase this to 1,000 per second, and be ready for 100,000 transactions per second in the future.

This 100,000 transactions per second can be achieved through sharding: splitting a blockchain horizontally to achieve faster processing time. That will be the next big project after the implementation of The Merge.

Author

  • Florian Feidenfelder is a technical analyst with many years trading experience in the stock exchange and crypto markets. He has broad experience in forex trading, coaching, and funds management.

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