What does merging the Ethereum blockchain mean for cryptocurrencies?
Known as the Merger, Ethereum’s revamp will make it much more energy efficient and, over time, pave the way for it to scale up and become faster, according to the network’s developers. They say an update years from now will go smoothly, although some investors are wary of possible hiccups. the software upgrade has been in the works for years, and it will change the way Ethereum orders transactions to be more energy efficient.
It is an update to the Ethereum blockchain, moving it from the current proof-of-work (PoW) consensus mechanism to the more environmentally friendly proof-of-stake (PoS) system.
Exchanges and lending platforms began temporarily disabling Ethereum-related services ahead of the merger, which should be completed in the next few hours. If all goes according to plan, they will later come back online once the renewal is complete.
Ether has climbed around 80% since its mid-June low, well above Bitcoin, partly due to Merge hype. That rally is cooling and another market risk is that investors will take profits, considering the narrative has played out for now.
But Ether’s mid- and long-term outlook is brighter, according to Stefan Rust, CEO of blockchain development house Laguna Labs. In a note, he said Ether could top $3,000 by the end of this year and possibly achieve the so-called “flipping” in time, referring to the idea that its market cap could surpass Bitcoin’s, Bloomberg reported.
The PoW system for cryptocurrency mining, used by tokens such as Bitcoin, allows all miners to lend computing power to validate crypto transactions, therefore drawing a lot of computing power. Since most of this power comes from fossil fuels, POW mining is said to be bad for the climate. On the other hand, PoS limits the number of miners, thus reducing the total power consumed by crypto mining.
Both Bitcoin and Ether are down more than 50% in 2022, hurt by rising interest rates that sapped liquidity from global markets. Cryptocurrencies traded in tight ranges on Thursday as the clock ticked down to a major software upgrade by Ethereum, the most commercially important blockchain in the digital asset sector.
Ethereum is a blockchain-based software platform that can be used to send and receive value globally with its native cryptocurrency, ether, which is the second largest digital token.
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