The reputation of bitcoin, which still uses the PoW consensus and dominates the cryptocurrency industry, is affected by The Merge, which is said to replace cryptocurrencies forever?
The $204 billion market cap Ethereum upgrade, which has been expected for years, began last week at 7:34 a.m. EST Bellatrix, opening the door for blockchain to join another decentralized ledger called Beacon Chain And there was a change in the economics of the ether.
benefits of merge
Merge is the latest upgrade to the Ethereum blockchain, which aims to create a trustworthy decentralized environment for finance to come.
In addition to solving energy difficulties, switching to Proof of Stake brings more benefits.
In POS systems, validators who have staked part of their tokens verify block transactions.
The more tokens someone has linked to the blockchain, the more likely they are to be randomly selected as a network validator.
In contrast, PoW, which is token mining using computers to solve mathematical problems, consumes a lot of energy.
PoW has a significant disadvantage due to this rate of energy consumption as it will still be the basis for bitcoin mining long after Ethereum stops using it.
The recent collapse of cryptocurrency lenders during a bear market is not the only macroeconomic threat currently facing the entire crypto ecosystem. There are other risks as well.
Political turmoil, high inflation rates and flamboyant national monetary policies are further problems.
These macro factors are said to be the catalyst for the current bear market.
Bitcoin’s all-time high was $69,000 in November 2021.
Since then, the global economy has been in crisis, causing the price of bitcoin and other cryptocurrencies to drop dramatically.
Given that the price of bitcoin has varied and is now hovering around $21,000 per coin, the short-term price outlook for the most widely used cryptocurrency is still unknown.
What developments or changes could aid in Bitcoin’s rally is not yet clear.
Additionally, given that the volatility of the well-known cryptocurrency worries mainstream investors, bitcoin’s usefulness could come under even greater pressure from Ethereum’s network upgrade, which aims to establish its ecosystem as the currency of the future. Is.
Ethereum merger will put pressure on Bitcoin
Digieconomist, a science and technology journal that analyzes bitcoin energy use, typically employs economic models incorporating network hashrate, mining income, and annual energy consumption.
“Bitcoin is unlikely to be more sustainable any time soon,” it concluded recently.
The results were supported after China banned bitcoin mining, which significantly reduced the number of renewable energy sources needed to power the network.
Cryptocurrency analyst and researcher Alex de Vries claims that “Bitcoin got dirty after Chinese mining operations in 2021.”
Is PoS consent possible for bitcoin?
While it may sound tempting, converting bitcoin from PoW to PoS is technically difficult.
Getting over 51% of the vote on the network would be highly challenging, even if a group of individuals intended to adopt that change.
Compare this to Bitcoin Maxis, who believe PoS could jeopardize the decentralized nature of bitcoin.
Additionally, those who make a lot of profit from bitcoin farming would probably be against any suggestion of this nature.
A similar sentiment is observed on the Ethereum network as well.
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.
However, since the currency will be more environmentally friendly, it may also have greater acceptance.
After the integration, only 23% of the entire volume will be Proof of Work, mostly in the form of bitcoin.
After ETH Merger, Regulators Will Keep an Eye on Bitcoin
Regulators are now looking for ways to control bitcoin, with PoW being the first target. PosOne One of bitcoin’s ongoing flaws is its image as a power guzzler.
Unlike PoW, Ethereum is building the foundation for PoS, which cannot be used for metaverse or NFT.
However, new protocols and governance models may be developed in response to competing cryptocurrencies.
Competition, regulations and energy concerns are just a few of the variables with bitcoin’s uncertain future.
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