Ethereum has been preparing to “merge,” which might present fresh chances for investors as well as temporary disruptions in certain cryptocurrency transactions. The Merge has now actually taken place. In plain but possibly misunderstood terms, Ethereum is now a cryptocurrency token powered by a proof-of-stake network rather than a proof-of-work network.
Beacon, a proof-of-stake chain growing concurrently with Ethereum blockchain since 2020, was necessary for this operation. Despite not previously processing transactions, Beacon served as a test platform for the PoS update, enabling a smooth transition. Execution Layer, or the manner of Ethereum’s PoW protocol, had to join with Beacon Chain, or the Consensus Layer, in order for PoS to fully shift.
As the deadline for a significant system update of Ethereum, one of the most significant blockchains of Ethereum in terms of business in the digital asset space, drew near, cryptocurrency prices fluctuated between narrow bands. As the price decline continued, Bitcoin, the largest and best-known cryptocurrency in the globe, was trading at more than 1% lower at $20,016. The value of the global cryptocurrency market today surpassed $1 trillion, according to CoinGecko, while being essentially flat at $1.03 trillion.
The price of Ether, which is the second largest cryptocurrency and a component of the Ethereum network, was unchanged at $1,592. Ethereum is transitioning to proof-of-stake as its consensus protocol. The Merge, which would be expected to be concluded in the following hours despite numerous delays, would lead to higher use of the blockchain.
The fact that Bitcoin is still trading below the $20,500 threshold shows that the bulls haven’t been active enough to take control of the market. The limited volume of purchases supports the sellers’ pressure. Buyers may be able to push BTC just above the $20,575 mark, which might lead to some potential upward growth. The second-largest cryptocurrency, Ethereum seems to be going in no direction. This volatility in the cryptocurrency industry could be brought on by Ethereum’s switch to PoS. As per Edul Patel, CEO as well as the Co-Founder of Mudrex, it appears like BTC and ETH are gearing ready for a major price shift as the Merge draws closer.
Shiba Inu’s cost decreased by about 3% to $0.000012, whereas Dogecoin’s price was to some extent lower at $0.06. Uniswap, Solana, Polygon, XRP, Binance USD, Polkadot, Avalanche, Litecoin, Chainlink, Apecoin, Tether, Cardano, Stellar, and Tron prices all underperformed in comparison to what they had performed earlier.
Because of the uncertainty about how many central banks would increase the rate of interest in the face of a weakening worldwide economy, Bitcoin has been stuck with the narrowest spread in the trading area. Many crypto companies have filed for bankruptcy or are fighting to survive as a result of meltdowns like that of the Terra/Luna ecosystems and hedging fund Three Arrows Capital, which have also dampened enthusiasm.
What Is Proof Of Stake?
The blockchain will switch from a proof-of-work (PoW) paradigm to a proof-of-stake (PoS) one after the merge. Both of these algorithms are employed to enable users to add fresh cryptocurrency transactions and also to keep track of them on a blockchain.
In the present proof-of-work approach, computers are powered by enormous amounts of energy as they compete to solve challenging mathematical problems that validate transactions. On the other side, proof of stake necessitates that users get a “stake” within the blockchain, as even the name suggests.
This implies that to verify transactions, Ethereum consumers will have to make a sizable upfront expenditure. This type is anticipated to use significantly less energy.
What Impact Will The Merger Have On Current And Future Investors?
Investors might reap the rewards in the future even though the Ethereum merger isn’t anticipated to speed up the network or reduce transaction prices immediately. Although no outcome is definite, King believes that investors in cryptocurrencies may benefit from the merger in the long run as it will provide the groundwork for future advancements in speed, cost, and ecosystem development.
The platform’s native cryptocurrency, ether, which investors use to perform transactions, may eventually attract more users as a result of quicker transactions and lower transaction costs, which could affect ether’s price.
According to Vladimir Gorbunov, founder, and CEO of the MetaFi ecosystem Choise.com, if there are more investors, there should be less ether available. Additionally, when ether’s supply declines, the value of the two tokens may rise, which is good news for investors.
According to Currency Metrics, the price of one ether coin is roughly $1,600 as of September 14, 2022, down from the all-high of around $4,892 in November last year.
Will The Merger Reduce Ethereum’s Hacker Exposure?
According to Gorbunov, the merger will make Ethereum significantly safer. According to him, following the integration, the initial expenditure needed to verify the blockchain transactions would be close to $55,000 or 33 ETH.
Everyone would have to pay that price to have access to the network in the first place, even hackers. Gorbunov anticipates the barrier will make Ethereum a lot safer. King cautions that hackers will always be able to exploit the blockchain.
“Ethereum’s susceptibilities after the union may differ due to the network’s core architecture change, but the security concerns will always stay the same,” he claims. The greatest concern is always cybersecurity vulnerability.
Remember that many cryptocurrencies are extremely volatile investments with unpredictable value fluctuations and no assurance of making money. Experts advise against putting more money into these kinds of investments than you are willing to lose.
How Will The Merger Affect The Environment?
The blockchain is anticipated to become more energy-efficient due to the merger, as was already indicated. As mentioned on the website of Ethereum, the current carbon emissions of Ethereum are comparable to Singapore. Since the merger should reduce Ethereum’s carbon emissions by almost 99%, it might appeal more to investors who care about the environment.