Forex in this article
• Ethereum merger probably on September 15th
• NFTs can benefit from reduced energy consumption
• Repeat attack warning
On September 15, the time has come: the Ethereum blockchain will switch from “Proof of Work” technology (PoW) to “Proof of Stake” (PoS) technology. To do this, the PoW chain and the PoS chain, which currently run in parallel, must be merged. Since the basic structure of the functionality of the Ethereum network changes as a result of the merger, and the focus is no longer on computing power, but on the number of coins stored when updating the blockchain, transactions in ETH should be significantly faster, cheaper and far . be less energy-demanding after the merger. “BTC-ECHO” states that the total energy consumption of the Ethereum network is expected to decrease by more than 99 percent after the merger.
Since most NFTs are created on the Ethereum blockchain, the transition to proof-of-stake will also affect the NFT market. This may gain further popularity with the completed merger. However, one expert also sees a significant risk for NFT owners.
Merge also makes NFTs “greener”
According to Crypto News Flash, analysts predict that the PoS process will make minting and maintaining NFTs easier. This could give the market for non-fungible tokens a new push, since for example the creation of NFTs – as elsewhere in the Ethereum network – will entail lower costs than before. This in turn – along with the greater sustainability resulting from the lower energy requirements – could lead to greater acceptance, according to “Cryptopolitan”.
According to “BTC-ECHO”, the NFT ecosystem is currently being criticized as a climate killer due to its high energy consumption. However, this is likely to change after the merger, so the crypto magazine for NFTs even sees an opportunity in the future to form an alternative to the traditional financial system. NFTs could then be used, for example, to send assets more energy efficiently or to store physical artwork, according to BTC-ECHO.
NFT expert warns about the dangers of a fork
But there is also a risk to the NFT market – if a fork is formed on the Ethereum network. A fork is the splitting of a blockchain into two threads. The announcement of a miner from China shows that this risk exists: Ethereum prospector Chandler Guo is already planning to split the blockchain of the second largest cryptocurrency in order to preserve the old PoW method. Then, in addition to the merged currency ETH, there will also be the new cryptocurrency ETHPoW. According to “BTC ECHO”, other parts of the Ethereum community could also migrate to an alternative blockchain that will continue to run with Proof-of-Work.
NFT expert Adam McBride explained on Twitter why a fork could pose a problem for NFT users. “The Ethereum merger could put your NFTs at risk,” he writes at the beginning of a detailed thread. However, there is still enough time to take protective measures.
The Ethereum Merger Could Put Your NFTs AT RISK🚨
Here’s a 🧵thread that explains why and gives you a simple solution to keep your NFTs safe.
– AdamMcBride.eth 🔎 NFT Archaeologist (@adamamcbride) 11 August 2022
“If the merger happens, at least one proof-of-work fork of Ethereum will live on,” McBride said. This would create two versions of the existing NFTs – one on the PoW chain and one on the PoS chain. So multiple “original” NFTs would exist at the same time. The expert doesn’t necessarily have a problem with users receiving an NFT “for free”. Instead, he warns of so-called “replay attacks”. “This is when a transaction happens on one blockchain and can be repeated on another,” McBride said. So, for example, users could sell one of their NFTs on the PoW chain for ETHPoW, but a stranger might then be able to repeat 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 “pretty high probability”.
However, the NFT expert also has some advice on how NFT owners can protect themselves from this danger. On the one hand, according to McBride, the issue is only relevant if you plan to sell your ETHPoW assets soon after the merger. If you never want to interact with the PoW chain again, don’t worry. For everyone else, he recommends taking all their NFTs currently for sale off the market until after the merger. Then they must first transfer the NFT to a new wallet on the PoW chain before resuming the offering. That would definitely cut the link between the PoW NFTs and the PoS NFTs, according to McBride.
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