Ethereum, the second largest cryptocurrency by market capitalization, has been on the rise for a few months. In fact, this network’s blockchain is about to collapse historical update which will forever change the way it works.
Called now The Merger or merge, this update has been in progress for almost two years already. Its launch was not officially announced until 2022 after several successive postponements.
If the upgrade is getting so much attention right now, it’s mostly because of its promises. promises that likely to disrupt the entire cryptocurrency industry and Bitcoin in particular.
Bitcoin threatened by The Merge?
Although at first glance Ethereum’s upgrade seems to have nothing to do with Bitcoin, some analysts believe that it could be very successful. the influence of the latter.
For Kyle McDonald, an independent researcher, the Bitcoin network may be “controlled” after the Ethereum update. It would result in a regulation Bitcoin price crash. It is also to avoid unpleasant surprises that he recommends that members of the crypto-currency community sell their Bitcoins now.
I went on @CoinDesk to FUD #bitcoin 🤗 “The ethereum merger is not just about ethereum…investors and regulators will realize that proof of work was never needed. bitcoin will never hit $69k again. it’s a great time to sell all your bitcoin.” pic.twitter.com/BZ2XG6yVIF
—Kyle McDonald (@kcimc) September 2, 2022
The reasons he gives are quite simple to understand. According to him, the update will enable the Ethereum blockchain to adopt a much less energy-intensive method of transaction validation Proof of Stake. Moreover, Ethereum is not only the second cryptocurrency in terms of value, it is also a huge network where many other cryptocurrencies rely on its blockchain.
Also, once Ethereum proves that it is possible to use less energy to achieve the same result at the level of cryptocurrencies, the entire market will be upset. Both investors and regulators would then understand that the energy-intensive method currently used by Bitcoin and Ethereum, known as Proof of Work, it was never necessary.
Reduced consumption
According to statistics, the Ethereum network power consumption will be reduced by more than 99% by adopting the Proof of Stake mechanism. The Merger will make the ETH blockchain a more energy efficient network.
During his interview last Friday on CoinDesk TV’s “First Mover” program, researcher McDonald mentioned the “climate crisis” and criticized Bitcoin’s huge energy usage and its users.
So, in light of that Bitcoin it doesn’t have a team like Ethereum, it would be very difficult for him to abandon the Proof of Work mechanism. Because of this, he thinks Bitcoin could be the first cryptocurrency to fall victim to these regulations.
The Merger: A Downside for Bitcoin?
With concerns about the climate crisis becoming more widespread today, it is only natural that the cryptocurrency industry will come under heavy criticism. by most environmentalists. Blockchain technology has always been a major target of critics and regulators because of the amount of energy it consumes to operate.
According to analysis, one transaction on Ethereum can be used about 181 kilowatt hours. A figure equivalent to six days of household energy consumption in the United States.
If blockchain requires so much energy, it is mainly to ensure the validation of the operations they process as well as to secure the networks. However, such a waste of energy can no longer continue, especially if the Ethereum merger is successful in showing an industry-wide safe exit for McDonald’s.
Impact of The Merge on the Ethereum network?
The main purpose of The Merge change the verification mechanism initial blockchain (Proof of Work), against a more ecological mechanism (Proof of Stake). This update should be done during this month. It is supposed to allow the blockchain to easily maintain itself without using a huge amount of energy.
Kyle McDonald said in his interview that the possibility that Ethereum rreduces the energy costs of its blockchain by 99.95% Probably. In order to track the movement of Ethereum energy, he created the Ethereum Emissions tracker. This software takes a bottom-up approach, but does not consider the price of Ethereum or the price of electricity, according to McDonald’s website.
To explain his process, he first needs to establish himself on the hashrate, to then examine the matter in question. Finally, he develops a technical argument about how much electricity the grid should use.
Global influence
However, it cannot be denied that the update is new it will have important consequences not only on the Ethereum network, but also on the global market. In fact, Ethereum represents a huge ecosystem of developers and is one of the main gateways to Web3.
Through the Ethereum network is possible carry out individual financial transactions without resorting to intermediaries or institutions centralized by using smart contracts.
Use this ecosystem allows developers to create decentralized applications, or DApps, for token exchanges, decentralized finance, securities trading, interest generation, and even games, etc.
Therefore, when Ethereum becomes more energy efficient many developers who were previously hesitant to participate due to the potential impact on the environment, may very well be motivated to finally jumped into Web3 and especially the Metaverse.
