Can Ethereum's First Mover Advantage Solidify the Smart Contract Space Dominance?
Ethereum has now become one of the most widely blockchains of crypto, and its upgrade, also know as ‘the Merge’ will transition the blockchain from a proof-of-work consensus mechanism to the more efficient, more secure and less energy-intensive proof-of-stake method. The method will also be better for implementing new scaling solutions.
The upgrade is badly needed now, as it will also be able to support Ethereum’s growing number of users. Is is meant to solve problems such as slower speeds and higher fees. So it makes sense to get this transition done sooner than later. but unfortunately its not that simple.
What is a difficulty bomb?
On a proof-of-work consensus mechanism, miners must solve complex math problems to earn a reward. The difficulty bomb, which is a special code that’s always been a part of Ethereum, increases the computing difficulty of mining, eventually making it impossible to do so. When this so called ‘bomb’ goes off and is running its course, it will be an indication that the days until the so-called merge are numbered, and it will mean that eventually the proof-of-work math problems will become impossible to solve. Miners will then lose profits trying to mine.
It would only make sense that miners would eventually abondon the proof-of-work model and migrate to a proof-of-stake method. But before this all happens, Ethereum developers must all agree that enough testing has been accomplished so that the Merge can be unveiled seamlessly. But so far that hasn’t happened, and the difficulty bomb has been delayed, not for the first, but for the fifth time now. More testing is still needed to ensure that the transition will be smooth, which hopefully will be done around the 15th of september 2022.
Experts believe that a succesful implementation of the Merge could become one of the greatest accomplishments in cryptocurrency history. A smooth transition would transform one of the most widely used blockchains be a more smooth running and affordable network that will be capable of supporting a multitude of applications in the crypto world.
But if Ethereum developers are not able to do this soon, it could mean trouble going forward. The longer it takes, then the more likely it becomes that other smart contract-capable blockchains such as Solana, Avalanche, or Cardano could be the ones who will grab the market share first.
The Sepolia testnet
But the good news is, the penultimate test environment network (the Sepolia testnet), a two-step process, has successfully been completed. This testnet merge takes the project one step closer to Ethereum’s mainnet upgrade later this year.
Currently, Ethereum is up by approximately 5.15% since yesterday, and the media is speculating this could be due to this succesful completion and the upcoming ‘Merge’.
Chris Terry, BPSAA Board Member and VP Enterprise Solutions at SmartFi, the US-based open lending platform, wants to share his ideas on the matter, he says:
“The bad news is the Ethereum developers have pushed back the difficultly bomb which was an essential step for the planned Merge at the end of the year. The good news is they did manage to get the Sepolia test net running. The Ethereum upgrade, now years behind, shows how difficult this business is. Each day that goes by opens the doors for projects like Cardano, Solana, Avalanche and others. But, just like Bitcoin, Ethereum has first mover advantage and that still is huge. If Ethereum can finally get to proof of stake it will solidify, without question, the smart contract space dominance. But they better move fast.”
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