Ethereum Merger Highlights Key Strength, Says Coinbase Exec

A Coinbase (PIECE OF MONEY -0.11%) executive just explained the best part of the long-awaited Ethereum (ETH -4.87%) Merge. Coinbase COO Emilie Choi highlighted Ethereum’s most exciting strength – and how the platform upgrade shines a light on that quality.

The merger is now on the books, and cryptocurrency investors should keep an eye on how Ethereum executes its move from a proof-of-work (PoW) platform to a proof-of-stake (PoS) system. . For Choi, the journey is more important than the destination.

What is Fusion?

Around 2:40 a.m. ET on Thursday, Ethereum began merging its digital ledger with a new system, which previously operated as a testnet known as Beacon Chain. Ethereum developers and blockchain node operators had run a few merges on smaller testnets, and all signs pointed to a successful platform upgrade to the Ethereum mainnet.

As expected, The Merge went off without a hitch. Major crypto-trading platforms such as Coinbase, Kraken, Binance and Robinhood Markets suspended transactions for Ethereum and Ether-based tokens for a few hours, giving the technology update time to roll out. Today, Ethereum transactions are validated by a much faster system that requires only 0.05% of the electrical energy consumed by the old PoW platform.

This groundbreaking move has been in the works for six years and also paves the way for three other rounds of significant network upgrades. Ethereum co-founder Vitalik Buterin considers Ethereum functionality to be 55% complete after The Merge, which leaves plenty of room for further improvements.

What Choi said

This is where Emilie Choi comes in. Choi delivered this crucial insight at the annual conference Goldman Sachs Communacopia + Technology conference earlier this week:

“I think the most important thing that [The Merge] represents is that there can be sustained and ongoing technology development done by large-scale decentralized communities,” she said. Ethereum.

It is important. Like Buterin, Choi expects Ethereum to improve over time. This platform was designed with long-term flexibility in mind, allowing Ethereum to weather expected challenges and unexplored surprises through platform updates. The merger was a fantastic example of this ability, proving that the network can undergo truly fundamental changes without breaking the crypto platform.

Future updates will continue to reduce transaction costs and increase execution speeds. They will also introduce a work-sharing feature known as sharding, improve Ethereum’s security model, and expand the system’s scalability. In the long term, Ethereum will evolve to take advantage of improvements in computer systems. For example, the Ethereum network of 2030 could secure and validate its transactions with quantum computing systems.

What’s good for the Ethereum goose may not be good for the Bitcoin jar

Every cryptocurrency does indeed have some platform upgradeability, but the Ethereum community takes this quality more seriously than most of its peers. Bitcoin (BTC -1.32%) has barely changed since its launch in 2009, other than a few tweaks to address unexpected security issues. The immutable nature of Bitcoin is an advantage because its holders can be sure that the long-term supply is limited to 21 million coins.

However, the largest cryptocurrency should probably consider moving from PoW to PoS (or another validation system with lower compute and power requirements) one day. This change took years of planning and testing in the more flexible Ethereum community. Will we see a proof-of-stake version of Bitcoin in this decade? Probably not.

So the two major names in crypto take surprisingly different paths. One size does not fit all cryptocurrencies, and that is completely normal. Each digital coin was designed with a unique set of features and long-term goals, and these fundamental differences will always guide their development. In the case of Ethereum, openness to new ideas is the name of the game and investors should adopt this attitude.

The merger showed us that even ambitious platform changes can happen without a hitch. As Choi said – and Buterin would surely agree – sustained development is the secret sauce to Ethereum’s recipe for success.

Anders Bylund has positions in Bitcoin, Coinbase Global, Inc. and Ethereum. The Motley Fool holds and recommends Bitcoin, Coinbase Global, Inc., Ethereum, and Goldman Sachs. The Motley Fool has a disclosure policy.

Robert M. Larson