The second-largest cryptocurrency by market value, Ethereum, and its Blockchain, worth over $150 Billion, have tried to achieve something that no other significant Blockchain has ever done. Ethereum Merge is a substantial transition that will improve its technology to reduce carbon emissions by more than 99.9%. And this was confirmed on Thursday, September 22nd, 2022, by Vitalik Buterin, the founder of Ethereum, as a big moment for the Ethereum ecosystem as it switched from the Proof-of-Work (PoW) system to a Proof-of-Stake system (PoS). What effect will this Ethereum Merge have on the most popular cryptocurrency, Bitcoin, and other cryptocurrencies?
What is The Merge about?
The Merge is the name given to the process by which the original Ethereum Mainnet and the Beacon Chain, a different Proof-of-Stake Blockchain, merged to form a single chain. The Ethereum merge got underway on September 6, with the Bellatrix Upgrade marking a radical change that will convert Ethereum from Proof-of-Work to a Proof-of-Stake basis.
The switch to the PoS paradigm moves Ethereum away from the more energy-intensive PoW approach. Although they function differently, both systems are used for transaction confirmation and adding new blocks to the chain. Unlike the PoW system, which entails a large amount of energy and a global network of computers running concurrently when a transaction occurs, the PoS system, during the staking procedure, has coins put up as collateral. In the PoS system, getting additional coins is the only thing that can boost your chances of winning.
What’s next now that The Ethereum Merge is complete?
The Ethereum community has been considering the merging event for several years, and teams working on projects based on Ethereum technology have confidence that it is inevitable. Therefore, it is acceptable to assume that market prices have already considered The Ethereum Merge’s potential effects. Hence, The Merge probably won’t have much of an immediate effect on Bitcoin and other cryptocurrencies.
Despite the success of The Ethereum Merge, cryptocurrency prices declined by the day’s end on Thursday, with Ethereum going down by 5.5%. Nevertheless, the head of over-the-counter trading at the London-based crypto company BCB Group, Richard Usher, confidently states that The Ethereum Merge marks a significant advancement in the usability of cryptocurrencies. Even if Bitcoin and other cryptocurrencies are not immediately impacted, they will continue to support growth in the future of all crypto assets.
Ethereum itself will experience the most impact as the effects of the merger on investors and the crypto startup scene will be minor compared to the impact on miners. The value of the previous model (PoW) will probably decline, and the mining hardware will not function with the new PoS model. If the PoS version of Ethereum gains popularity and the price increases, the PoW version may see a price decrease, and most of its miners will be forced to cease operations.
Mixed Feelings about The Ethereum Merge?
Alex De Vries, the founder of Digiconomists, is skeptical of the new system’s ability to solve crypto’s energy problem. It stated that The Ethereum Merge is a step on the right path for efficient crypto mining but can raise worries about the PoW’s environmental impact and may lead to its ban in the near future by policymakers in an attempt to regulate crypto. If the merger is successful, he anticipates this will be brought up again at some point in the near future, if not immediately.
With the merger’s success, predictions that Ethereum will eventually outperform Bitcoin in market capitalization have emerged, but Bitcoin has cemented its position as the leading digital asset. Even in this world of multiple chains, Bitcoin is considered the digital gold standard and the repository of value.
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