How Ethereum merge will affect crypto investors

The Ethereum blockchain, the largest behind bitcoin, is about to undergo the beginnings of a major upgrade.

Dubbed the “merge,” Ethereum is switching to a more energy-efficient method of validating transactions that take place on the platform, known as proof of stake.

The upgrade is similar to how the transition away from using dial-up modems to fiberoptics enabled the internet to be used for a wider variety of things, such as video, online storage and music streaming, Greg King, founder and CEO of Osprey Funds, tells CNBC Make It.

Here’s a look at what the merge means and how it will affect crypto investors.

What is proof of stake?

The merge will transition the blockchain from a proof-of-work (PoW) model to a proof-of-stake (PoS) model. Both are algorithms used to allow users to add new cryptocurrency transactions and keep a record of them on a blockchain network.

The current proof-of-work model requires massive amounts of energy to power computers that race to solve complicated math equations in order to validate transactions.

Proof of stake, on the other hand, requires users to have a “stake” in the blockchain, as the name implies.

This means that Ethereum users will need to make a pretty hefty investment upfront in order to authenticate transactions. However, this model is expected to be much less energy intensive.

How will this affect investors and potential investors?

How will this impact the environment?

Will the merge make Ethereum less vulnerable to hackers?