As the market continues to consolidate at stagnant prices, several major projects and companies have been building infrastructure and aiming to perfect their product. Since Bitcoin started a downtrend from its all-time high of around $67,500 in 2021, investors have been waiting for the perfect opportunity to buy into several projects.
While the bearish sentiment still shows strength in the industry, there have been a couple of announcements from major projects that may impact prices. However, the most awaited among these is Ethereum’s Merge due in a couple of days.
But is the merge really the only answer to all the issues currently faced by users of the network? Read on to know
What is Ethereum?
Built using smart contracts, Ethereum is a decentralized, open-source blockchain. Founded in 2015 by Vitalik Buterin, Ethereum has since become one of the most important cryptocurrencies in the entire industry. In simple words, Ethereum is a payments system and a platform upon which dapp or Decentralized Applications can be built.
The native token of Ethereum is ETH or Ether, which is currently the second largest cryptocurrency after bitcoin. With a market cap of $180 billion, ETH is currently trading at around $1480 after crashing from its all-time high back in 2021.
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About the Merge
As a highly anticipated event, the merge has been discussed for a long time now. It is, in simple words, the transition of Ethereum’s current Proof of Work consensus to the Proof of Stake mechanism.
The whole of the merge is to help Ethereum grow technically as well as critically. There have been a lot of debates about the unnecessary waste of energy that cryptocurrencies generate. The carbon footprint left by Ethereum every day is massive. Infact, the energy consumption of just one single transaction on the Ethereum Network is enough to power an average U.S household for more than 3 days.
A successful merge will end up lowering the amount of energy used by the network by around 99.95%. This official date for initiation of the merge is set on the 6th of September this year. It shall be carried out in two phases- Bellatrix and Paris.
The Bellatrix Epoch shall mark the time that the merge process is set to action whereas the Paris phase will begin on the 10th and last till the 20th of September. The merge may occur at any date between the mentioned period. The terminal total difficulty, which will act as a trigger for the event is going to be set at 58750000000000000000000.
How effective is the Merge?
Undoubtedly, the Merge will be a very important part of the growth of Ethereum. However, it cannot claim to be the only factor that will individually solve all problems for Ethereum. While it may be worth the hype the community has been giving it, the merge may not have the kind of effect on prices that investors have been expecting.
The merge shall still be a beneficial event for the Ethereum Network in the long term view.
Another major event to look out for would be the EIP-4844 upgrade. This upgrade shall introduce proto-danksharding parallel to the ethereum fork after the merge. Proto-danksharding is expected to boost the scalability of Layer 2 rollups by up to 100 times.
In short, Ethereum may be due for a decent price increase post the merge. But expecting an exponential spike in its value on a short-term basis may not be wise.
The event could potentially make Ethereum way better than its current state and incentivize a whole new chunk of investors and users to interact with the ecosystem. But it should be noted that such a scenario will require time and further betterment in the project.
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