This cuts energy costs by eliminating the powerful computers that race to solve puzzles, supporters of proof of stake say. They also argue that the system is more egalitarian than mining because it has a lower barrier to entry — in other words, a “staker” doesn’t have to own a fleet of expensive computers to get involved.
But the system has fierce critics. Bitcoin proponents say proof of stake perpetuates inequality because only people who have enough crypto to participate in a staking process can reap the benefits. After the Merge, Ethereum stakers will need to pony up 32 Ether (or about $54,000) to enter the lottery and earn rewards.
“Only those with a lot of money can get paid, and very few can participate,” said Cory Klippsten, the chief executive of Swan Bitcoin, a financial services firm focused on Bitcoin. “Every single time this has been tried throughout history, the end result is that the people in control give themselves more money and power, and the system inevitably collapses.”
Why has the Merge taken so long?
The process has taken so long partly because of the high stakes. A failed Merge could cripple thousands of crypto projects and cause a market crash.
“Essentially, they’re changing the engines out in flight,” said Christopher Calicott, a crypto venture investor. “Nothing has ever been attempted at this scale.”
To avoid disaster, crypto engineers and researchers across a number of groups including the Ethereum Foundation — a nonprofit that helps oversee the platform — have conducted years of tests to prepare for the Merge. They have had to check for security bugs and build a new blockchain that uses proof of stake.