Ethereum co-founder Vitalik Buterin took the stage at the Blockchain Futurist Conference in Toronto Wednesday to talk about the blockchain’s widely anticipated transformation. Under the purple glow of the Rebel Entertainment Complex, Buterin, who is Russian-Canadian, assured attendees that the years-long work to carry out what’s known as the merge—a prerequisite for Ethereum 2.0—is nearly complete. 

Later that day, Ethereum said it successfully ran its final test for the upgrade, sending the price of the world’s second biggest cryptocurrency to a two-month high on Thursday. 

The shift promises sweeping reforms to how the blockchain functions, as crypto skepticism feeds off and fuels a broad sector downturn. Here’s what you need to know: 

What is Ethereum 2.0? The next iteration of the blockchain will be triggered by the merge. It promises to slash transaction fees, free up data space, improve security and cut energy use on the Ethereum blockchain by more than 99.9 per cent. 

It will do this by moving from a proof-of-work system—a labour- and energy-intensive process for verifying transactions—to a proof-of-stake system, which uses just one validator at a time and no special hardware, helping to make it far more efficient. 

“The merge isn’t just about the merge”: Ultimately, the upgrade is meant to make Ethereum scalable and accessible. A major barrier, said Buterin, is the cost of transactions on the chain. The average Ethereum transaction fee over the past two years ranged from US$1 to US$20, he added in his presentation. That’s more than the median daily income in many countries in which Ethereum is trying to take hold. “If we’re talking about blockchains being this global thing that’s supposed to empower people that are not empowered today in underprivileged countries, then you can see how it starts looking less viable,” he said. “We’re talking about single transactions potentially taking up people’s entire daily income.” 

Buterin said changes to how transactions are bundled and stored following the merge could bring the cost of a transaction down as low as 0.2 US cents. 

Bringing crypto back to the future: Buterin reflected on the ideals of the 1990s, when Bitcoin promised a world in which all daily transactions could be done with cryptocurrency. “Fast forward to today, we have millions of people with crypto wallets and we have millions of people that have private keys inside their own browsers,” said Buterin. “Why? Because they want to trade monkey pictures.” Addressing the cost, scalability and energy issues associated with crypto could bring it closer to a version of the original conceit.  

What’s next: Buterin has been teasing the upgrade for years. Hype has been building this year, with its launch expected in the latter half of 2022. After the successful merge test on Wednesday, Ethereum is on track for a Sept. 19 launch date. Crypto skeptic Molly White has criticized the years-long promise of an imminent upgrade as a “useful way for Ethereum fans to dismiss the valid concerns about the enormous energy expenditure of their preferred blockchain.” 

Beyond its energy consumption, crypto faces increasing criticism over its utility as more than a speculative asset. Buterin acknowledged there are questions about Ethereum’s applications. “This is basically what I hope we can start thinking about more,” he said. “The technical improvements are happening, and they’re going to happen, but what kinds of improvements in terms of what we use Ethereum for are going to make [these things] possible?”