It’s been a dramatic year for crypto investors, with the past nine months punctuated by a series of dramatic peaks and troughs that have seen some traders on platforms like thebitcoincode.io rushing to sell fast, and others eager to take advantage of some of the lowest prices seen over the past two years.
But this month, a hotly-anticipated event is finally happening, and Ethereum’s ‘merge’ could be about to change the game once more. This long-awaited upgrade to the Ethereum blockchain, which powers a number of innovations in the crypto ecosystem, including NFTs, has finally landed this week, and is expected to give crypto prices a much-needed leg-up in the long-run.
For those who’ve been biding their time and waiting for the market to recover, it hasn’t come a moment too soon.
According to Nigel Green, CEO of the world’s leading international financial consultancy, asset management and fintech organisation DeVere, the Ethereum Merge is significant – and a ‘landmark, historic moment’ that none of us should underestimate.
This bullish prediction will likely have many traders breathing a sigh of relief after months of having to navigate the market’s characteristic volatility – but although its unpredictability is something that will never change, this latest piece of news is a welcome sign that things could finally be on the up.
‘The Merge’ is a major overhaul and switch over to a new mode of operation that will use 99.9 per cent less energy, as well as reducing supply of the Ethereum cryptocurrency.
“The years-in-the-making merge, a network-wide, grand scale upgrade is here,” says Green.
“This far-reaching overhaul of the most commercially important blockchain in the digital asset ecosystem is probably the most important, landmark event in crypto history, since the launch of Bitcoin.”
According to Green, the shake-up is set to transform Ethereum “from a proof-of-stake mechanism, which lowers transaction costs, enables the network to process more transactions in a shorter amount of time”.
Previously, the Ethereum blockchain, just like that of Bitcoin, ran on a proof-of-work model, which relies on a large computer network made up of so-called ‘nodes’ competing with one another to solve complicated mathematical problems, with those that are fastest in doing so then able to mine the next block of a transaction in order to create new coins.
But following the latest upgrade, the more energy-efficient model sees nodes being selected via an algorithm that prioritises those holding more of a network’s currency at any given time, rewarding their stake.
Energy efficiency and environmental impact have become increasingly pertinent topics in the cryptocurrency space in recent years. Multi-billionaire and Tesla owner Elon Musk previously made headlines when, after announcing that the electric car manufacturer had invested in Bitcoin and would begin accepting it as a means of payment for its cars, he later reneged on the idea, citing concerns about the amount of energy it takes to produce the cryptocurrency and saying that until changes were made, the move would be put on hold.
The company has since begun accepting only Dogecoin, which consumes only 0.12 kWh of energy per transaction compared to Bitcoin’s 707, and is thought to be one of the most environmentally friendly cryptocurrencies currently available.
With this in mind, the latest move by Ethereum could spell trouble for Bitcoin if its blockchain is slow to adapt similarly. Although it remains the largest cryptocurrency in the world by market share, the growing demand for more sustainable practices could eventually see it fall out of favour when compared with its closest competitor – although how exactly that would unfold in practice remains to be seen.
Either way, there’s little escaping the fact that ‘The Merge’ could be about to change the game for crypto investors both now and in the longer-term – and for the most part, only for the better.
“Whilst some of the news has been priced in already, let there be no mistake: this event will be a major catalyst in driving prices higher in the long-term,” says Green.
“The slashing of energy consumption will be the main reason as it will become significantly more appealing to investors, who can bring with them enormous capital, expertise and reputational pull.
“Besides having a more positive climate impact, The Merge’s effect of reducing supply, cutting costs and speeding up transactions will also appeal to both individuals and institutions.
“The Merge represents a major boost not just for Ethereum, but for blockchain technology itself.”
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