Will Ethereum Merge Boost Crypto Back To Pre-Winter Levels?

The transformation of Ethereum into a carbon-neutral generated digital currency looks set to cause serious disruption in the crypto space. Ethereum is currently the world’s second largest cryptocurrency next to Bitcoin.

According to Ethereum’s developers, the upgrade will result in securing and scaling the network because the platform is currently home to a $60 billion ecosystem of cryptocurrency exchanges, lending companies, NFT marketplaces, and apps.

The process, called the merge, has seen the popular currency move its core digital machinery to an energy-efficient system.

The event has taken years of research and development and involved Ethereum’s transition from its original “proof-of-work” blockchain to the more sustainable “proof-of-stake” blockchain.

Explaining the process, Ethereum Foundation researcher Justin Drake told the world’s leading crypto exchange, Coinbase, that the transition was extremely complicated. “The metaphor I use is this idea of ​​replacing an engine from a running car,” he said.

While the intention to transition Ethereum to a greener phase has been a long-term plan in the making, even those at the helm doubted it would happen because the process carried so much risk. “There’s a part of me that hasn’t quite realized that this is actually happening,” Drake said. “I’m kind of in denial, you know because I’ve trained myself to just expect it to happen in the future.”

The sheer complexity of the update means it could also be one of the biggest open source software events in history. The process required massive coordination across numerous teams along with hundreds of researchers and developers.

A new green future for crypto

According to experts, the move now means Ethereum will consume an incredible 99.9% less energy than it did before the merger happened. A comparative example would be, says Coinbase, if Finland were to shut down the power grid completely.

Ethereum’s proof-of-work system, which was based on and developed by Bitcoin, required crypto miners to compete to write transactions to the ledger, earning rewards by solving cryptographic puzzles. Crypto mining requires warehouse-sized research farms powered by high-capacity computers running at full speed while attempting to generate the currencies.

Will Bitcoin Be Overtaken by Ethereum?

The impact of the merger on other leading cryptocurrencies could therefore be dramatic. As investors increasingly move toward carbon-neutral opportunities, energy-guzzling cryptocurrencies have been given short shrift.

Indeed, the potential impact of the merger on the digital economy is such that experts view the resulting changes with trepidation. The process has been so complicated that there is a level of risk, even now the platform has passed.

As ING’s chief economist for digital finance and regulation Teunis Brosensnotes: “Ethereum’s migration from PoW to PoS could be the biggest event in cryptoland this year. The migration itself and its aftermath carry risks and will be closely watched in the crypto community. A successful migration will be a compliment to the Ethereum community’s ability to manage major events It will also remove an important obstacle to the acceptance of Ethereum by regulators and thus the development of Ethereum-based services by traditional financial institutions.

Brosen continues, “We imagine this development could put Bitcoin on the defensive in terms of potential adoption by traditional finance. The Bitcoin community is conservative, and we don’t see Bitcoin transitioning from PoW to PoS anytime soon.”

DeVere Group’s Nigel Green also predicts a resurgence in interest in Ethereum due to the merger, describing the event as an “instant day for crypto.”

Green says: “The reduction in energy consumption will be the main reason as it will become significantly more attractive to institutional investors, who bring with them huge capital, expertise and reputation.

“The institutional investors who have been sitting on the sidelines are now likely to move in.”

He goes on to add: “In addition to having a more positive climate impact, The Merge effect of reducing supply, cutting costs and speeding up transactions will also appeal to both individuals and institutions.

“Due to the significance of The Merge, we expect the development to strengthen prices across the broader crypto market to some extent.”