Ether has seen six consecutive weeks of gains, raising it from a 1-1/2-year low of $880 in mid-June to close at the $2,000 level.
Ether has seen six consecutive weeks of gains, raising it from a 1-1/2-year low of $880 in mid-June to close at the $2,000 level.
It looks like a mega-upgrade of Ethereum is happening. eventually.
After years of delay, the “merge” is certain to happen in September, but blockchain with cryptography is undergoing a radical change in a system where the creation of new Ether tokens become far less energy-intensive,
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“This is an exciting time for the Ethereum ecosystem,” said Omar Syed, co-founder of smart contract platform Shardem. “I think there will be drama around the merge, but I don’t think there will be any technical constraints.”
Investors seem to agree with Ether outperforming big brother bitcoin.
Ether has seen six consecutive weeks of gains, raising it from a 1-1/2-year low of $880 in mid-June to close at the $2,000 level, even though it remained close to its November 2021 peak of $4,868.79. away from.
In comparison, bitcoin has faded, rising 37% from its June lows at $24,116.
According to CoinMarketCap, ether is undercutting bitcoin’s market share: it now accounts for about one fifth – 19.7% – of the total crypto market capitalization of $1.14 trillion, down from 14.9% two months ago. The share of bitcoin has dropped from 44.9% to 40.2% over the same period.
“Crypto is still so tightly coupled, I think when the merge is completed successfully it could drive up the price of bitcoin as well,” said Alex Miller, CEO of Hiro, which builds developer tools for building applications for bitcoin.
If the creators of Ethereum are successful, as is largely expected, it could be a game-changer for the blockchain, making it cheaper to mine and making it easier for fintechs and other crypto apps to adopt.
There has certainly been little assurance about the elusive transition, which has been delayed several times, with developers planning to push the button as recently as June in what investors are beginning to fear may never see the light of day. can not see.
The merge is also fraught with risk, and the fortunes of the approximately 122 million Ether in circulation, worth about $232 billion, could be at stake if it fails.
If the upgrade doesn’t go well, it will “put the entire crypto world back five or 10 years,” said Hiro’s Mr. Miller.
‘Difficulty Bomb’
The Ethereum blockchain currently uses an energy-intensive proof-of-work (PoW) method for validating blocks, in which miners have to make huge amounts of money to quickly solve complex computational problems to win newly minted coins. use electricity.
On a parallel chain, Ethereum is testing a proof-of-stake (PoS) system that only requires miners to “stake” their coins to validate transactions and create new blocks. It promises a 99.95% reduction in the energy consumption of the blockchain and makes it ready for faster transactions.
Not everyone is happy about the imminent merger of the two systems – especially ether miners, whose expensive mining equipment will become obsolete, and may not even be used for bitcoin mining.
Ether mining has so far been more profitable than bitcoin mining. According to Arcane Research, ether miners made $17 billion versus $18 billion for bitcoin miners in 2021.
Some miners have decided to mine the next best option, such as the tokens Ethereum Classic or Ravencoin.
At least one miner has announced plans to oppose and continue mining Ethereum, leading some to keep the PoW chain in its current form even after the merger, possibly competing with advanced blockchain. Is.
However, that option has its dangers.
Ethereum’s creators have designed a “difficulty bomb” to rapidly increase mining difficulty in order to discourage PoW parallel chains after the merge.
Furthermore, both Tether and USDC – the largest stablecoins – have shed their weight behind the merge, reducing the potential for widespread adoption of parallel PoW chains.
foamy futures
Alex Thorne, Head of Firmwide Research at Galaxy Digital, said: “The likelihood of a long-lasting chain split for Ethereum following the merger remains slim.”
Nevertheless, at least some investors are preparing for a hard fork, or parallel PoW chain, the situation in the derivatives market indicates.
“Ether futures on the CME exchange were also trading at a premium of $1,905,” said Matthew Siegel, head of digital asset research at fund manager VanEck, reflecting expectations around proof of work.
“But the difference is not big enough to think there is excessive foaming,” he said.