The Massachusetts Institute of Technology has named Ethereum’s (CRYPTO: ETH) upcoming transition to a proof-of-stake blockchain to its list of top technological breakthroughs for 2022.
What Happened: In a report published on its technology review website, MIT explained how a proof-of-stake consensus mechanism is a way to secure digital currency and end the energy consumption woes that plague the crypto industry.
“If all goes as planned, Ethereum, which runs all sorts of applications in addition to the world’s second-largest cryptocurrency, will transition to it in the first half of 2022,” read the report.
“The shift has been projected to cut energy use by 99.95%.”
MIT also named Cardano (CRYPTO: ADA), Solana (CRYPTO: SOL), and Algorand (CRYPTO: ALGO) as the other “key players” to watch in the PoS space.
The institution stressed the importance of “The Merge” — the moment when Ethereum officially transitions to PoS and drops the proof-of-work consensus — as a defining moment with the potential to set the stage for wider PoS adoption.
“Ethereum will be the largest network to use proof of stake,” said MIT.
Why It Matters: Unlike proof-of-work, the proof-of-stake consensus mechanism doesn’t require equations to be solved, but instead randomly rewards validators based on how much capital they stake.
Last year, Ethereum co-founder Vitalik Buterin said the network’s transition to PoS could reduce energy consumption by a factor of 1,000. Buterin is also assisting the Dogecoin (CRYPTO: DOGE) blockchain with its own planned transition to a PoS network.
It is worth noting that not all stakeholders in Ethereum’s ecosystem stand to benefit from the transition. The shift to PoS would effectively put an end to all PoW Ethereum mining operations.
Despite the impending shift, Ethereum miners like Hut 8 Mining Corp (NASDAQ: HUT) and HIVE Blockchain Technologies Ltd (NASDAQ: HIVE) have continued to invest in mining equipment.
Price Action: As of Tuesday morning, Ethereum was trading at $2,900, up 10.8% in the last 24 hours.
Photo by Shubham Dhage on Unsplash.
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