June 3, 2022
Ethereum is having a bit of a moment.
It is the second-largest crypto currency by market capitalization and the largest in terms of daily transactions. Over 80% of all non-fungible tokens (NFTs) use Ethereum as their transaction platform.
More importantly, Ethereum (ETH) is also the leading platform for smart contracts. This is what happens when money becomes programmable... when legal agreements are written as software code. It is a technology so revolutionary that it is already being called "Web 3.0".
(Web 1.0 was the first boom for tech in the late 1990's and Web 2.0 was the social media boom.)
It's that big.
For the past few years, cryptocurrency had an awkward adolescence. It was no longer a bright shining thing full of promise, but it wasn't a functioning adult yet, either.
It has been too early to give crypto any real responsibility. Mow the yard. Shovel the sidewalk. That sort of thing is fine.
In a brief (yet accelerated) coming-of-age, crypto went to college this year and it just joined a fraternity. We hope it doesn't play too much beer pong. If we are lucky, it will graduate in a few months.
The Ethereum network heads into its first round of final exams this week. What's at stake here is the transition from Proof of Work to Proof of Stake. The merger from the old system of accounting to a new system will enable the network to become 95% more energy efficient, and paves the way to handle tens of thousands of transactions per second within the next year or so. Ethereum could overtake Bitcoin as the #1 crypto.
The upgrade has been years in the making and it going to be challenging.
This week, the merger is being tried on the Ropsten network.... the oldest and best established test network for Ethereum. The test is expected to end on June 8th. If successful, there will be two more test rounds. If they succeed, the entire Ethereum network may be upgraded by August/September.
Here's the analogy that I use...
Imagine that you are flying on a fully loaded plane from New York to Los Angeles. While going over Chicago, you look out the window and see two guys on the wing trying to change out an engine. You've heard that your plane can fly on just one engine. And you hope it's true.
People are getting nervous, and rightfully so. It's a make or break moment.
In response to a question about this, founder Vitalik Buterin had an interesting exchange yesterday on Twitter.
