The cryptocurrency industry is getting excited about a major event known as “the merger,” which its proponents say could boost prices in the long run and significantly change the future of cryptocurrencies.
The merger is an upgrade to the ethereum blockchain, the technology that powers the second largest cryptocurrency, and other technologies in the crypto ecosystem, such as non-fungible tokens (nfts). it is expected to take place in September.
Reading: Bitcoin ethereum merge
There has been a boom in cryptocurrency investing in recent years, with the value of the overall market more than doubling at one point last year as people hoarded their money in bitcoin, ether, dogecoin, and other cryptocurrencies. . Whether you’re really into crypto and are following all the latest developments in the space or you own a bit of crypto through a platform like coinbase or venmo, if you’ve heard of the upcoming alleged merger, you might be wondering what this really means to you.
Here’s everything you need to know about the ethereum meltdown, including what the update means for crypto prices, the environment, and more.
what is the ethereum meltdown?
This ethereum upgrade, or “merger” as it’s known, will change the way new crypto transactions are made on the blockchain.
Currently, the ethereum blockchain, like the bitcoin blockchain, runs on a proof-of-work model, which involves nodes (computers that are part of a large network) competing with each other to solve complicated math problems. those who are successful can mine the next block of a transaction and create new coins.
The update will transition ethereum to the proof-of-stake model, which is a more energy efficient and environmentally friendly system. implies that nodes are selected through an algorithm that has a preference for nodes that contain more than one network’s currency.
In other words, your “participation” in the network is rewarded on top of the computing power that is rewarded in the proof-of-work system.
when will the ethereum meltdown happen?
After many delays, the process is expected to start on September 6 with the actual merge around September. 15, according to the post published Wednesday by the ethereum foundation.
why is the ethereum meltdown happening?
Proponents say the transition will allow the Ethereum network to reduce its power consumption by around 99%.
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The proof-of-work model, which is what the bitcoin network uses, requires much more energy than the proof-of-stake model. The negative impact on the crypto trading environment has been top of mind for many critics and proponents of cryptocurrencies, and Ethereum’s switch to proof-of-stake, which consumes less power, is seen as a significant advance.
It will also lay the groundwork for other aspects of the network roadmap, such as making transactions more efficient.
what does the ethereum meltdown mean to you?
If you have crypto assets, you probably don’t need to take any action. but this could offer a more environmentally friendly option for those interested in cryptocurrencies, and could have some impact on cryptocurrency prices.
what does the ethereum merger mean for your ether holdings?
If you have ether, the native cryptocurrency of the ethereum blockchain and the second most popular cryptocurrency after bitcoin, you don’t have to do anything, according to the ethereum foundation. but beware of scams. If an app, cryptocurrency exchange, or cryptocurrency wallet sends you instructions or recommendations, be sure to check that the notices are actually coming from those platforms, the ethereum foundation wrote in its blog post.
“If you’re a user and you just want to send some eth from one person to another or use a defi app, you don’t really have any material exchange going for you,” says Chris McCann, partner at Carrera Capital.
If you are a socially conscious investor feeling indecisive about the environmental impact of cryptocurrencies, this could be good news for you.
“The stakes are high in this new event,” says eliézer ndinga, director of research at 21shares, which offers exchange-traded cryptocurrency products. he described the merger as “a big step forward, especially for retail investors. more aware of global warming and climate change” who want to invest in more environmentally friendly assets.
what does the ethereum meltdown mean for the price of ether?
Cryptocurrency prices have been under pressure this year. After an impressive few years that included record prices last November, cryptocurrencies such as bitcoin and ether have seen significant declines more recently along with other financial assets such as stocks. bitcoin is down about 55% since the beginning of the year, as is ether.
But this merger could rock the price of ether, which has been outperforming bitcoin for much of the recent cryptocurrency rallies.
“eth has been outperforming bitcoin largely due to news about the upcoming merger,” ben weiss, chief executive of cryptocurrency ATM company coinflip, tells money by email. “If it goes off without a hitch, the merger will be an incredible technical feat.”
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Cryptocurrency investors are well aware of volatility and should be prepared for more ups and downs.
“Some price volatility on such a highly important key catalyst is reasonable,” alex tapscott, managing director of ninepoint partners’ digital assets group, told money by email.
fans of cryptocurrencies, and specifically of the ethereum network, hope the move will help increase the price of ethereum. A successful merger “should make a strong bid below the price of eth and help it resume its uptrend,” tapscott added.
katie talati, director of research at investment firm arca, told coindesk: “this is an event that a lot of people are underestimating, especially based on the current price appreciation” of ether. “We’re going to look back at this a year from now and [realize] we were at the bottom [of the market] there.”
There is some perception that this change will unlock further growth potential in ethereum, says stéphane ouellette, CEO and co-founder of frnt financial. But the long-term assessment of the value of the move “will likely be judged by subsequent years of blockchain development and emerging applications and technologies,” he adds.
In other words, while the merger is probably a positive thing for ethereum and its supporters in general, investors may have to stay put rather than benefit from an immediate price jump. (This is what financial advisors really recommend: investing for the long term, rather than speculating and trying to get rich quick.)
The merger really lays the groundwork for other advancements expected to be made on the ethereum network in the future, says mccann. In the long term, this could be a “positive catalyst” for the ether, she adds.
what about the price of bitcoin?
While ethereum is the star of the show when it comes to meltdown, it is not necessarily the only crypto that could benefit.
“A successful merger will likely drive up the price of all crypto assets,” especially ether and other projects associated with it, tapscott says.
But bitcoin prices, he adds, could also rise as “investors across the board gain more confidence in the asset class.”
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