People outside of the crypto world now may just see the crypto market with the red of blood as the top two market cap currencies Bitcoin and Ethereum fall down a long path from their all-time highs. But there is one thing that crypto insiders care about more - The Merge of Ethereum - which is projected to happen soon.<h2>What is The Merge?</h2>The Merge signifies the union of Ethereum's existing execution layer (the Mainnet as we know it today) and its new proof-of-stake consensus layer, the Beacon Chain. It does away with the necessity for energy-intensive mining in favor of securing the network using staked ETH. More scalability, security, and sustainability - a genuinely exciting step toward accomplishing the Ethereum mission.<img src="https://cdn.builder.news/news/11ed0d99d5788f90a8e6023f659fee92.jpg" alt="What is the merge" title="What is the merge" width="600" height="263">Source: EthereumIt's vital to keep in mind that the Beacon Chain was initially distributed independently of Mainnet. The Ethereum Mainnet, with all of its accounts, balances, smart contracts, and blockchain data, is still secured by proof-of-work, whereas the Beacon Chain uses proof-of-stake. The impending Merge is when these two systems ultimately merge and proof-of-stake permanently replaces proof-of-work.Simply explained, let’s imagine that Ethereum is a spacecraft whose engine burns a lot of fuel and is not ready for traveling across universes. The community has constructed a new engine with the Beacon Chain. After extensive testing, it's almost time to change out the new engine for the old one. The swapping of the two engines is called The Merge.The Merge is merely one component of Ethereum 2.0's update. The overall strategy is divided into three major parts.Phase 1 of&nbsp;Ethereum 2.0's update&nbsp;The first phase is the launch of Beacon Chain. The Beacon Chain is a ledger of accounts that governs and directs the stakers network. It is not the same as the Ethereum Mainnet of today. It does not manage smart contract interactions or transactions. It is a new consensus engine (or "consensus layer") that will shortly replace proof-of-work mining, bringing with it numerous substantial improvements.It has been nearly 20 months since the Beacon Chain launched in December 2020.<img src="https://cdn.builder.news/news/11ed0d99d5789695a8e6023f659fee92.jpg" alt="phases of the Merge" title="phases of the Merge" width="600" height="365">Source: mycryptopediaPhase 2 of&nbsp;Ethereum 2.0's update&nbsp;The Merge as we already discussedPhase 3 of&nbsp;Ethereum 2.0's update&nbsp;Sharding is an upgrade that will improve the scalability and capacity of Ethereum. Sharding allows for the secure distribution of data storage requirements, lowering the cost of rollups and making nodes easier to manage. They allow layer 2 solutions to offer minimal transaction fees while using Ethereum's security. This upgrade is scheduled to occur after the Merge of Mainnet and the Beacon Chain.<h2>Why is this upgrade important?</h2>Apparently, Ethereum wants to alter the way it processes transactions. There are reasons why they consider The Merge significant.<h3>Proof of Work is somewhat outdated</h3>Like Bitcoin, Ethereum employs the proof-of-work (PoW) consensus mechanism, which challenges users to solve mathematical problems in order to validate transactions and protect the network.This strategy is successful, although it is inefficient. Miners, or people who solve these challenges, must invest huge quantities of energy and equipment in order to have a chance at mining the transaction blocks and collecting rewards.This consensus is very bad for decentralization since companies with vast computational capacity can seize control of more than half of the validator nodes, posing significantly greater security risks to Ethereum. A decentralized blockchain, by definition, cannot have single points of failure.Another problem is that PoW harms the environment dramatically. According to the University of Cambridge, Bitcoin alone creates 132.48 terawatt-hours (TWh) each year, easily exceeding Norway's annual energy consumption of 123 TWh in 2020. The amount of CO2 emitted by this energy usage will differ based on how that energy was generated. However, in 2020, the United States — where 35.4 percent of Bitcoin mining takes occur because China prohibited cryptocurrency mining in 2021 – produced 85 pounds of CO2 per kWh. This equates to roughly 40 billion pounds of CO2 emissions from Bitcoin mining in the United States alone.<h3>Proof of Stake - Not new but necessary</h3>Proof of Stake uses validation to sustain the network rather than the block mining technique used by Proof of WorkThe following is how it works: Users pledge their ETH by staking it in order to gain the opportunity to build a block. One of the users is chosen to be the validator based on their stake. After a member validates a block of transactions, other participants can attest (or affirm) that the block is valid. When there are enough attestations, the network adds a new block, and incentives are dispersed in ETH, the blockchain's native currency, in proportion to each validator's stake. If a user detects a malicious block, they risk losing their whole stake through a process known as “slashing”Overall, PoS reduces the need for expensive equipment and cheap electricity, making participation more accessible to the average user.In addition, the environmental toll imposed by the PoW governance scheme is frequently cited as one of the primary critiques leveled at cryptocurrencies. In comparison, the switch to PoS is expected to cut the Ethereum network's energy consumption by 99.95%.<img src="https://cdn.builder.news/news/11ed0d99d5789e57a8e6023f659fee92.jpg" alt="The Merge PoS" title="The Merge PoS" width="600" height="436">Source: Business insider<h2>Some misconceptions about The Merge</h2><table><tbody><tr><td style="background-color: #f9cf2e;">Misconceptions</td><td style="background-color: #f9cf2e;">Facts</td></tr><tr><td style="background-color: [object Object];">You need to stake 32 ETH to run a node</td><td style="background-color: [object Object];">Anyone is free to run a node</td></tr><tr><td style="background-color: [object Object];">Gas fee will be reduced by The Merge</td><td style="background-color: [object Object];">The Merge only changes the consensus of Ethereum, not the network capacity. Therefore, it will not reduce gas.</td></tr><tr><td style="background-color: [object Object];">Staked ETH will be available to be withdrawn after The Merge</td><td style="background-color: [object Object];">Staked ETH is only ready to be withdrawn after the Shanghai upgrade</td></tr><tr><td style="background-color: [object Object];">Staking APR will be up 200% after The Merge</td><td style="background-color: [object Object];">Staking APR is estimated to be up only 50% after The Merge</td></tr><tr><td style="background-color: [object Object];">Validators will not be rewarded with liquid ETH until the Shanghai upgrade when withdrawals will be authorized</td><td style="background-color: [object Object];">Reward will be transferred to the validator's Mainnet account and will be available instantly</td></tr><tr><td style="background-color: [object Object];">There will be ETH 1 and ETH 2 after The Merge</td><td style="background-color: [object Object];">There will be one Ethereum</td></tr><tr><td style="background-color: [object Object];">The network will be down during The Merge</td><td style="background-color: [object Object];">The Merge will not cause downtime</td></tr></tbody></table>&gt;&gt;&gt; More details:&nbsp;<a href="https://www.builder.news/crypto-insights/misconceptions-about-the-merge" alt="Unveil misconceptions about the Merge" title="Unveil misconceptions about the Merge" target="_blank" rel="" class="">Unveil misconceptions about the Merge</a><h2>What will happen to ETH’s price after the Merge?</h2>Ethereum's improvements may make it more enticing and sustainable for wider usage, but experts are waiting to see how investors and companies creating technology on Ethereum's platform react to the changes. Given these considerations, here are some predictions for Ethereum's price this year:<h3>Plan #1</h3>Despite the difficulty of forecasting the price of a volatile cryptocurrency, analysts widely agree that ETH might break $4,000 again in 2022. According to Bloomberg intelligence expert Mike McGlone, Ethereum will finish the year between $4,000 and $4,500. But how far can it go from there? This will be determined by a number of elements (discussed further below) that may contribute to its long-term value.<h3>Plan #2</h3>If the same optimistic upsurge that began in mid-2021 continues, ETH might end 2022 between $6,500 and $7,500, according to the crypto news outlet Coinpedia. However, the crypto industry saw a bearish fall in 2022, indicating that Ethereum's price will not climb solely on the basis of sentiment. While the Ethereum team continues to migrate to second-generation updates, the blockchain now faces significant competition from similar platforms that are filling in the gaps."Ethereum was the only show in town," remarked Henri Arslanian, global crypto head at professional services firm PwC, on CoinDesk's First Mover on January 12. However, for the price of ether to continue climbing, investors will need to see increased demand and usefulness."I believe Ethereum can go over $8,000," Ian Balina, investor and creator of Token Metrics, a crypto research and media company, told NextAdvisor. "Ethereum is clearly the frontrunner, but because of Ethereum's high gas fees and slow transaction speed, rival blockchains are onboarding new users at a quicker rate."<h3>Plan #3</h3>If the forthcoming transition to Ethereum 2.0 is successful, Coinpedia expects an even greater price of $12,962.33 in 2022. The latest enhancements may make Ethereum more economical for consumers to mint and develop products, as the service fees for using Ethereum are now notoriously high.<h2>The Merge: Is it near?</h2>Vitalik Buterin, the co-founder of Ethereum, stated earlier this year that the Merge will take place in August, when the Beacon Chain is slated to officially shift from PoW to PoS. Given the upgrade's history of delays, Buterin's schedule is likely to be provisional.Sepolia testnet Beacon Chain went live earlier this June, setting the stage to provide Ethereum network developers with vital technical insights. On July 7, Sepolia was incorporated into the network.Recently, during a conference call on July 14, Ethereum developers proposed a permanent merger date. Tim Beiko, a core Ethereum developer who leads core protocol meetings, proposed September 19 as a potential goal date for the Merge during the conference call. The proposed target date was met with no opposition from the core developers.Later, on July 15, Tim Beiko tweeted that the Merge - Ethereum's long-awaited transfer to a new design - would take place the week of September 19. Following that, the target date is more like a roadmap than a deadline.<div class="pr-block-special">Disclaimer This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

Learn about the second phase of ETH 2 upgrade - The Merge, why the Ethereum community build it and correct some misconceptions

The Merge: A pivotal event for Ethereum