• Ethereum's The Merge is set to take place this month
  • The Merge has some remarkable benefits to crypto holders and NFT owners
  • There are some considerable issues that could put NFT owners' interest in jeopardy

The Merge, or the transition of the Ethereum blockchain from proof-of-work to proof-of-stake, is set to take place in just a few days. While many are looking forward to this momentous event, some Non-Fungible token (NFT) holders are worried about its implications for their collectibles.

Ethereum is the second most popular blockchain in the world and it is safe to say that it has more use cases compared to Bitcoin. Ethereum is behind the creation of smart contracts, a technology breakthrough that led to the creation of remarkable cryptocurrency initiatives, including the popular emerging trend, NFTs.

The Merge, more than the transition, encompasses the improvement of the blockchain's structure, suggesting it would introduce major changes to the Ethereum network. Many wonder what will happen to their NFT after The Merge and worry about the safety of their assets.

Representation of Ethereum, with its native cryptocurrency ether, is seen in this illustration taken November 29, 2021.
Representation of Ethereum, with its native cryptocurrency ether, is seen in this illustration taken November 29, 2021. Reuters / DADO RUVIC

The Merge will significantly impact the NFT space, according to many analysts. The transition is expected to reduce the maintenance cost for NF projects, which could lead to a much wider adaptation of the NFTs and much lower gas fees. Maintaining and minting NFTs is also anticipated to be a lot easier, which many analysts say could propel a surge for Ethereum.

The Merge will also introduce the blockchain's new features, which industry watchers think could trigger developers to experiment with them. Moreover, The Merge could remove the major issue that goes with NFT– environmental issues.

But, while there are a lot of benefits the Ethereum transition could bring to NFT collectors, there are also some risks, especially with the possible emergence of the community-led forks post The Merge. There is a possibility that duplicate NFTs will emerge because of the transition, which could lead to scams through the replay attack.

The prospect of the replay attack notes that a transaction made on the proof-of-work fork could be replayed on the proof-of-stake mainnet. For instance, if an owner of a Bored Ape Yacht Club sells their NFT on the proof-of-work, malicious actors can replay that transaction on the proof-of-stake merged chain, with the owner vulnerable to the possibility that they could lose ownership of the original piece.

NFT analyst and rugradio host, Adam McBride, mentioned some of the risks users could face post The Merge and offered ways how they could avoid those risks.

"Don't be tempted to sell your NFTs on the PoW chain (at least immediately following the merge)," the analyst said.

"In case you didn't know - you'll get duplicate NFTs on the PoW chain, BUT trying to make a quick buck - as many traders are planning - can open you up to possible replay attacks," McBride noted. "Understand that most projects will only recognize their NFTs on the PoS chain for IP rights and utility," adding that owners should not "plan on selling your PoS BAYC and using the PoW version to get into ApeFest."