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Markets Magazine

Ethereum’s Coming ‘Merge’ Could Make or Break Crypto

The technology change will dramatically cut energy use, but a lot could go wrong.

Crypto Currency Tokens As Billionaire Warren Buffett Said That Most Digital Coins Won’t Hold Their Value
Photographer: Chris Ratcliffe/Bloomberg

Sometime later this year, Ethereum is set to make the biggest change in its near-decade history, an event that’s certain to ripple through the entire ecosystem of cryptocurrencies and digital assets. Think of it this way: The most important commercial highway in crypto is about to be completely repaved.

Ethereum is essentially computer software that uses so-called blockchain technology to provide a digital ledger for recording transactions. It’s become the most popular basis for a growing array of commercial crypto assets and applications, including lending products, nonfungible tokens (NFTs), as well as its native token, Ether. Ethereum isn’t owned by anyone but built and refined by a community of developers, and it runs on a network of data centers throughout the world. These data centers operate as “miners” on the network, ordering transactions that are posted to the digital ledger. In return they get paid in Ether. This system has been dubbed “proof of work.”