This crypto rose ahead of the Ethereum merger and it is not Ethereum Classic

A cryptocurrency called Ravencoin (RVN -18.09%) is hovering in the wake of Ethereum‘s (ETH -7.93%) Merge, and its gains surpass even those of the oft-cited Merge receiver Ethereum Classic (ETC -9.15%). This smaller proof-of-work crypt has increased by more than 90% in the past month. What is Ravencoin and can it continue to rise?

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What is Ravencoin?

Ravencoin is a proof-of-work cryptocurrency that ranks among the 60 most valuable cryptos by market capitalization. After the big month, Ravencoin now has a market cap of $750 million. While Ravencoin has been hot lately, it is by no means a newcomer to the crypto world. Ravencoin started as one Bitcoin (BTC -1.85%) fork in 2018 and is similar to Bitcoin in that it has a hard cap on the total supply of Ravencoin. There is a maximum supply of 21 billion Ravencoins versus Bitcoin’s maximum supply of 21 million. Ravencoin differs from Bitcoin in that it offers smart contracts and allows holders to create their own tokens by burning 500 Ravencoins.

The Raven’s Flight

Many readers are probably aware of Ethereum’s Merge event, which took place this week. As a brief summary, The Merge moves Ethereum’s consensus mechanism from Proof of Work to Proof of Stake. Simply put, think of Merge as a software update. The most important change will be the way Ethereum reaches consensus. Until now, Ethereum miners have spent energy solving complex mathematical equations to process transactions. After The Merge, these mining rigs will no longer be used and Ethereum transactions will be processed via staking, where Ethereum owners can commit or “stake” a portion of their Ethereum holdings against validating transactions and securing the network to earn a share of transaction fees.

The move will bring tangible benefits to many members of the Ethereum community, who can stake their holdings to make money. But there is one group of network participants who will clearly not benefit from the transition – Ethereum miners. Miners use expensive computing equipment to mine Ethereum, and this hunt is now redundant because after The Merge, they can no longer use their hardware to obtain Ethereum. Also, the hardware they own is becoming less valuable as it has few other uses.

The miners may be down, but they’re not out, and that’s where Ravencoin comes in. Ethereum mining equipment cannot be used to mine Bitcoin, but it can be used to mine other proof-of-work cryptocurrencies such as Ethereum Classic and Ravencoin. Ethereum Classic has grabbed most of the headlines as a Merge recipient since it is a hard fork of Ethereum and is already a top 20 crypto by market cap, but Ravencoin has also been waiting in the wings. Ethereum mining rigs that use graphics processing units (GPUs) can be used to mine Ravencoin, giving this equipment a new lease of life. Ravencoin’s hash rate is rising, indicating that miners have migrated from Ethereum to Ravencoin.

In addition, FTX, one of the world’s top crypto exchanges, recently said it is adding perpetual futures for Ravencoin. These types of listings on major exchanges can be significant catalysts for smaller cryptos because they can increase liquidity, trading volume and interest in the asset.

There is more to Ravencoin than the merger

Ravencoin looks like a winner from Ethereum’s move to proof of stake. However, Ravencoin has more going for it than just being a proof-of-work crypto in the right place at the right time due to its compatibility with GPU mining rigs. Ravencoin has a robust community, an egalitarian approach, and some interesting use cases.

Ravencoin’s mining algorithm is ASIC (Application Specific Integrated Circuit) resistant, which means that ASIC miners cannot dominate the mining process and earn more rewards than ordinary users running cheaper and available GPU mining equipment. You can even mine Ravencoin using a computer without a GPU, although it won’t be as efficient. This also contributes to Ravencoin’s decentralization and security.

Ravencoin’s focus on allowing users to create their own tokens is also exciting. For example, you can tokenize property using Ravencoin by dividing an investment property into 100 tokens, or even 1000. Tokenization has many benefits for holders. Property is normally a relatively illiquid asset and you need to sell your property to make a profit on it. It can be a long and cumbersome process. With real estate tokens, users have round-the-clock liquidity and can theoretically sell their share of a property to anyone in the world within seconds. Tokenization of a property also makes it more accessible to everyday investors, who may not have the money for an investment property, but can purchase a token or tokens to diversify their property holdings.

Ravencoin should continue to benefit from the migration of miners from Ethereum in the near term. In the long term, there is much to like about the project beyond just this catalyst, especially its democratic approach to mining and the potential for tokenization. Cryptocurrencies, especially smaller ones, can be risky and volatile investments, but Ravencoin looks like a buy with a lot of potential for risk-tolerant crypto investors who want to make it a small part of their portfolio.