The Merge or Merger on the Ethereum blockchain is scheduled to occur by September 15 and move from PoW or (Proof of Work) to PoS or (Proof of Stake) Will it affect the NFTs industry created on the Ethereum network?
Ethereum, the blockchain created among others by Vitalik Buterin in 2015 has announced that it will stop working using Proof-of-Work and will switch to Proof-of-Stake. This means among other things that it will no longer use mining to validate transactions. Also, Ethereum.org has mentioned that the Merge will set the stage for future scaling updates, including fragmentation and will also reduce Ethereum’s power consumption by 99.95%.
The name Merge or Merge is also rightly related to the merger between the Ethereum Mainnet, related to the PoW and the Beacon Chain, which runs in parallel through the PoS. The upcoming Merge is when these two systems finally merge.
The clear example to understand in a more earthly way this concept would be:Imagine that Ethereum is a spaceship that is not yet ready for an interstellar journey. Using Beacon Chain, the community built a new engine and a reinforced hull. After several tests, it is time to hot swap the new engine for the old one in mid-flight. This will merge the new, more efficient engine with the existing ship, ready to put in some serious light years and conquer the universe.
The Merge represents the official switch to using Beacon Chain as the primary block production engine on the network. Mining will no longer be the bridge to produce block validation. Instead, proof-of-stake validators will assume the role and will be responsible for processing the validation of all transactions that pass through blocks on the Ethereum blockchain. They officially confirmed that history will never be lost, that as Mainnet merges with Beacon Chain, it will also merge all of Ethereum’s transactional history. But what will happen to the NFTs created on the blockchain. Many speculators and researchers of the blockchain created in 2015 talk about a copy of every NFT on the blockchain when the transition is complete.
Adam McBridecreated a thread on his official Twitter, where he exposes this possibility that is not proven, but not discarded one hundred percent.
He warned his followers that there is a risk to the owners of the NFTs, as the same NFT could exist in both the mining network and the staking network.
This warning is especially addressed to people who want to sell their NFTs immediately after the Merge, since, they could duplicate the sale operations right at that moment.
Another action that Adam proposes to his followers is to take out the NFTs that are for sale during the first days of this Fusion that will take place on the blockchain.
He termed this problem as a “replay attack” and this would happen when a transaction occurs on one blockchain and can be replayed on another.
For example, after the merger, a CryptoPunk owner sells his NFT for 5 ETH or ETHPoW (users are calling that way the token left activated on the proof-of-work blockchain). The hope of cashing it out is there, but the “replay attack” will appear and the problem is that once that sale is made, someone can “copy” that same transaction on the new Ethereum 2.0 by selling the CryptoPunk for 5 ETH on the Ethereum blockchain working with the proof of stake.
Adam McBride, first of all, proposes a simple solution to perform before the merger and that is to remove from the list any NFT you have for sale. After the merger, the ideal is to transfer the NFT that is on the PoW chain to a new wallet.
These shares will break the link between their NFTs in the PoW and will be only as NFTs in the PoS. He further adds that transaction fees should be inexpensive in consequence of the expected drop in the price of ETHPoW.
From Ethereum they have communicated that the blockchain will have protection against duplication, but it never hurts to be cautious. Finally, if you never plan to interact with the PoW blockchain left running and want to only interact with the new blockchain running through proof-of-stake, you don’t need to do any of this at all.
We will have to wait a few weeks to find out what complications and benefits this new Merge will bring, which is a historic action in the life of the Ethereum blockchain, the most important after Bitcoin.
Written by Rodrigo Catalan (TW: @RodrigoCatalanB) for NFT Express.