• Ethereum consolidation likely on September 15
• NFTs can benefit from lower power consumption
• Attack attack re-warning
On September 15, it’s time: The Ethereum blockchain is set to switch from Proof of Work (PoW) technology to Proof of Stake (PoS) technology. To do this, the PoW chain and the PoS chain, which are currently running in parallel, will be combined. As the basic structure of the Ethereum network functionality changes as a result of the merger and the focus is no longer on computing power but on the number of coins held when updating the blockchain, transactions in ETH must be faster, cheaper and remote. Less energy consumption after merging. “BTC-ECHO” states that the total power consumption of the Ethereum network is expected to drop by more than 99 percent after the merger.
Also, since most NFTs are created on the Ethereum blockchain, the move to Proof of Stake will also affect the NFT market. This could gain more popularity with a completed merger. However, one expert also sees significant risks for NFT owners.
Merging makes NFTs ‘greener’
According to Crypto News Flash, analysts anticipate that the PoS process will make minting and maintaining the NFT easier. This could give the non-fungible token market new impetus, as creating NFTs – as elsewhere in the Ethereum network – will result in lower costs than before. This in turn — combined with greater sustainability due to lower energy requirements — could lead to greater acceptance, according to Cryptopolitan.
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According to “BTC-ECHO”, the NFT ecosystem is currently under criticism as a climate killer due to its high energy consumption. However, this is likely to change after the merger, so that NFTs’ crypto magazine sees an opportunity in the future to form an alternative to the traditional financial system. The NFTs can then be used, for example, to send assets more energy-efficiently or to store physical artwork, according to BTC-ECHO.
NFT expert warns of fork dangers
But there is also a risk to the NFT market – if a fork forms on the Ethereum network. The fork is to split the blockchain into two parts. The announcement from a Chinese miner shows that this risk exists: Ethereum miner Chandler Guo is already planning to split the blockchain of the second largest cryptocurrency in order to keep the old Proof of Work method. Then, in addition to the combined ETH, there will also be a new cryptocurrency ETHPoW. According to “BTC ECHO,” other parts of the Ethereum community could also transition to an alternative blockchain that continues to work with Proof-of-Work.
Adam McBride, an NFT expert, explained on Twitter why a fork could cause a problem for NFT users. “Ethereum consolidation could put NFTs at risk,” he writes at the start of a detailed thread. However, there is still enough time to take preventive measures.
Ethereum merger could put NFTs at risk
Here’s a 🧵thread that explains why and gives you a simple solution to keep your NFT secure.
– AdamMcBride.eth 🔎 NFT Archaeologist (@adamamcbride) August 11, 2022
“If the merger occurs, at least one Ethereum Proof of Work fork will continue to exist,” McBride said. This will create two copies of the existing NFTs – one in the PoW chain and one in the PoS chain. So many “native” NFTs will be present at the same time. The expert doesn’t necessarily have a problem with the fact that users receive NFT “for free”. Instead, it warns of so-called “replay attacks”. “This happens when a transaction occurs on one blockchain and can be replicated on another,” McBride said. So, for example, users could sell one of their NFTs on the ETHPoW Proof of Work chain, but a stranger might then be able to replicate the same transaction on the PoS chain and trade the token there for the same amount of ETH. According to Adam McBride, while there is no guarantee that this scenario will occur, there is a “fairly high probability”.
However, the NFT expert also has some advice on how NFT owners can protect themselves from this danger. On the other hand, the issue is only relevant if you plan to sell your ETHPoW assets soon after the merger, according to McBride. If you never want to interact with PoW Chain again, don’t worry. For everyone else, he recommends taking all NFTs currently for sale off the market even after the merger. Then they must first transfer the NFT to a new wallet in the Proof of Work chain before resuming the offer. This will definitely break the connection between PoW NFTs and PoS NFTs, according to McBride.
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