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Ether's price rallied to hit two-month high, leading the pack of rise in crypto prices today on signs that a plan to upgrade the Ethereum blockchain passed a major test, potentially paving the way for one of the most significant changes in the cryptocurrency sector. 

Ether's software upgrade The Merge is set to take the blockchain to a system called Proof of Stake, in which staked Ether tokens will order transactions, from its current system called Proof of Work, a mechanism which uses powerful computers to order transactions.

The third and final ‘Goerli’ test environment network merge before the Ethereum blockchain makes its long-awaited move to proof-of-stake  has successfully been completed. Goerli was the last of three public testnets to run through a dress rehearsal of the Merge. After this, the mainnet Merge is expected to occur sometime at the end of September.

Ethereum co-founder Vitalik Buterin retweeted a post saying the test had activated proof-of-stake. In another tweet, Tim Beiko, a computer scientist who coordinates Ethereum developers, posted a screenshot suggesting the test of the planned merge had been successful.

The test network will be merging with a so-called proof-of stake test network, a transition that will mimic, on a smaller scale, Ethereum’s transition to a more energy-efficient system for ordering transactions. 

Soon, the current Ethereum Mainnet will merge with the Beacon Chain proof-of-stake system. This will mark the end of proof-of-work for Ethereum, and the full transition to proof-of-stake. This sets the stage for future scaling upgrades including sharding. The Merge will reduce Ethereum's energy consumption by around 99.95%, it claims in its website.

In proof-of-stake, so-called validators use their stacks of Ether to order transactions on the network. Currently, powerful computers solve complex puzzles to accomplish the same task using more energy.

Back in 2016, soon after Ethereum underwent a software upgrade to reverse a major hack, it experienced denial-of-service attacks. If everything goes smoothly, no one should even notice that the Merge has happened, Tim Beiko, who coordinates Ethereum developers, said in a recent interview with Bloomberg.

The second largest cryptocurrency and the coin linked to the ethereum blockchain has surged about 67% since digital-asset prices bottomed in June, and has outperformed crypto market benchmark Bitcoin.

(With inputs from agencies)

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