Ethereum completes 'Merge' upgrade, aims at cutting energy use by 99 per cent

The Ethereum blockchain has successfully completed its latest update – Ethereum Merge — which will allow it to use 99.95 per cent less energy, co-founder Vitalik Buterin announced on Thursday.

"Happy merge all," Buterin said in a tweet. "This is a big moment for the Ethereum ecosystem."

Ethereum, the second most popular blockchain in the world right now after Bitcoin, powers the Ether cryptocurrency andother digital tokens. While it has been quite popular among crypto investors and some major brands, the massive energy consumption has been a major hindrance.

However, with the new update, Ethereum has taken a huge step towards rivaling Bitcoin.

"This is a significant moment that will lead to ETH outperforming the broader crypto market for some time," said Richard Usher, head of over-the-counter trading at BCB Group told Reuters.

The update will change how transactions take place with the help of the Ethereum blockchain and also how the ether tokens are made. Earlier, the blockchain worked on a "proof of work” principle where computers had to solve complex mathematical problems in order to obtain the tokens.

However, the new system will implement a "proof of stake" principle where users will be able to win and store tokens by keeping their Ether as collateral. According to Buterin, the update will finally mark the shift from 'miners’ to 'validators’ — the step vital for decreasing the energy consumption.

The Ethereum Merge has already impacted the cryptocurrency market in an extremely positive way as the value of Ether has risen around 85 per cent from June.