Ethereum: The Merge will not reduce the price of gas

gas fee ethereum

The Merger, the next long-awaited update for Ethereum (ETH) should happen during September if not postponed. The main goal will be to replace the PoW (Proof of Work) protocol with the PoS (Proof of Stake) protocol.

The Ethereum Foundation took the floor this Wednesday, August 17 to clarify important information that many investors tend to misunderstand after this update: the gas price (gas fee) should not change contrary to certain beliefs with the implementation of The Merge.

Gas price unchanged after The Merge

In a message sent to the public, this Wednesday, August 17, the Ethereum Foundation therefore published a press release in order to to clarify certain aspects misinterpreted vis-à-vis The Merge update. So we could read:

The Merger will not reduce gas costs. These are a result of network demand versus network capacity. The Merge implementation is meant to deprecate the use of POW and promote PoS instead. On the other hand, this update does not significantly change the parameters that directly affect the capacity or throughput of the Ethereum blockchain.

The Merger will allow Ethereum’s main layer (mainnet) to be associated with its new part PoS Protocol, The Beacon Chain. This will result in a significant reduction in energy usage on the Ethereum blockchain (up to 99.5% less energy consumed).

In fact, the Ethereum network is greedy and from an ecological point of view, this is not the first time that crypto-currencies, especially certain blockchains, have been mentioned. Therefore, thanks to this update, Ethereum go green!

Simply because the previous POW protocol required intense competition between minors, which generated significant energy consumption. However, thanks to PoS this whole process will no longer exist and it will be bigger from a random selection of minors to validate the smart contract: a much less greedy and just as efficient method.

A long awaited update

If The Merge will not change the gas costs, it will allow on the other hand significantly reduce energy consumption and offer better scalability on the Ethereum blockchain.

According to some forecasts once the Merger is in place the annual rate of return should increase by at least 50% compared to the current rate to attract people. more capital on the blockchain.

Date of 19 September appears to be the one where the update will be applied. Even if it is still a technical feat to be done without stopping the operation of the blockchain.

In the past, The Merge was postponed several times, mainly due to the implementation of the the difficulty bomb. In fact, behind this name hides a system that must prevent miners from using the PoW protocol in the future in favor of PoS. However, this is still a rather sensitive operation and several times the developers had to force themselves to postpone its arrival.

Therefore, it now seems that the third quarter of 2022 and especially September is the official date if it is not postponed. Coinbase has already announced that Ethereum withdrawals and deposits (all transactions) will be temporarily suspended during The Merge update to verify that everything is in order on their platform when implemented.

The impact on the price of Ethereum

While the replacement of PoW with PoS may not appeal to every investor or project team using the Ethereum blockchain, overall it is a logical development that could strengthen ETH. number 2 position on the crypto market or even explode to levels never before achieved.

Ethereum: The Merge will not reduce the price of gas

As a result, in the last few months the price of Ethereum, which crossed the bar below $1000, has recovered significantly. Especially in the last 5 weeks when the asset gained around $600 back over $2000.

At the time of writing, ETH is trading at a price of $1813.77. A slight drop in the last few days, because the FED has again published a message about the inflation figures. This has affected Bitcoin and therefore Ethereum indirectly as well as the cryptocurrency market in general.

Ethereum influences other cryptos

Beyond the price of Ethereum jumping with the upcoming arrival of The Merge, this also has a positive effect on certain other cryptocurrencies. First of all, we will think primarily Ethereum Classic (ETC) which is a fork of ETH.

As some projects will want to migrate from the Ethereum blockchain to continue using the PoW protocol, ETC is clearly a prime candidate. Even Ethereum co-founder Vitalik Buterin spoke positively about Ethereum Classic in one of his talks. As a result, the price of ETC has almost doubled per month from around $20 to today $38.48.

Ethereum: The Merge will not reduce the price of gas

The IS Ethereum killers like Solana, Polygán or Avalanche also benefit from the announcement The Merge. In fact, Ethereum are competitors and therefore an ideal potential blockchain for certain investors or projects that do not want to benefit from the ETH blockchain anymore with the PoS event.

September is likely to be a very interesting month! For some experts Ethereum could reach $2500 before the implementation of The Merge. Between Bitcoin, which has had a little trouble establishing itself in recent months, and Ethereum, which continues to grow, we are entitled to ask ourselves what the deal by the end of the year?

Kraken's CEO is confident in his Bitcoin (BTC) purchase

Kraken’s CEO is confident in his Bitcoin (BTC) purchase

Surfin Bitcoin is next week!

Surfin Bitcoin is next week!