What Happens to Bitcoin with the Upcoming Ether Merger?

How will the reputation of Bitcoin, which still uses PoW consensus and dominates the cryptocurrency industry, be affected by The Merge, which is said to transform cryptocurrencies forever?

The market capitalization of the $204 billion Ethereum upgrade, which has been expected for years, began last week at 07:34 EST with Bellatrix, opening the door for the blockchain to connect to another decentralized ledger called the Beacon Chain and changes in Ether’s economy .

Benefits of The Merge

The merger is the latest upgrade to the Ethereum blockchain, which aims to create a trusted decentralized environment for upcoming finance.

In addition to solving energy problems, the move to proof of stake offers additional benefits.

In a PoS system, validators who have staked part of their tokens verify block transactions.

The more tokens someone has attached to the blockchain, the more likely they will be randomly selected as a network validator.

In contrast, PoW, which mines tokens by using computers to solve mathematical problems, uses a lot of energy.

PoW has a significant disadvantage due to this energy consumption because it will continue to be the basis of Bitcoin mining long after Ethereum stops using it.

The recent collapse of cryptocurrency lenders during a bear market is not the only macroeconomic danger facing the entire crypto ecosystem. There are also other risks.

Political unrest, high inflation rates and hawkish national monetary policy are further problems.

These macro factors are said to have been the catalyst for the current bear market.

Bitcoin’s record high price was $69,000 in November 2021.

Since then, the global economy has been in trouble, causing the price of Bitcoin and other cryptocurrencies to drop dramatically.

Given that the price of Bitcoin fluctuates and now hovers around $21,000 per coin, the short-term price outlook for the most widely used cryptocurrency remains unknown.

What development or change could help Bitcoin’s rise is still unclear.

Additionally, given that the volatility of well-known cryptocurrencies continues to worry mainstream investors, Bitcoin’s utility could come under even greater pressure from Ethereum’s network upgrade, which aims to establish its ecosystem as the currency of the future.

Pressure on Bitcoin will increase as Ethereum merges

Digiconomist, a science and technology journal that analyzes Bitcoin’s energy use, typically uses economic models that include network hash rate, mining revenue, and annual energy consumption.

“Bitcoin is not likely to become more sustainable anytime soon,” it recently concluded.

After China restricted bitcoin mining, significantly reducing the amount of renewable energy needed to power the network, the results gained support.

Alex de Vries, a cryptocurrency analyst and researcher claims that “Bitcoin got dirtier after the 2021 Chinese mining boom.”

A PoS consensus for Bitcoin is possible?

Although it may seem lucrative, switching Bitcoin from PoW to PoS is technically difficult.

It would be very challenging to get more than 51% of the vote on a network, even if a group of individuals intended to enact that change.

Contrast that with Bitcoin Maxis, which believes PoS could jeopardize Bitcoin’s decentralized nature.

Additionally, those who make a lot of money from Bitcoin farming are likely to oppose any proposal of this nature.

Similar sentiments have been seen on the Ethereum network.

Ethereum will also split into two chains, one of which will use PoW to validate transactions.

Therefore, it would be naive to conclude that all PoW chains can be converted to PoS.

But since the currency would be more environmentally friendly, there could also be a greater acceptance of it.

After integration, only 23% of the entire volume will be proof of work, mostly in the form of Bitcoin.

After the ETH Merge, Regulators Will Look at Bitcoin

Regulators are now looking for ways to control bitcoin, with PoW appearing to be the first target. PosOne of Bitcoin’s ongoing flaws is its image as a power-guzzler.

Ethereum creates the foundation for PoS, unlike PoW, which cannot be used for metaverse or NFTs.

However, new protocols and governance models are likely to be developed in response to competing cryptocurrencies.

Competition, regulations and energy issues are just some of the variables at play in Bitcoin’s uncertain future.

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