The merge is the focus of all eyes in crypto, and not just the Ethereum crowd. This event is important for all Bitcoiners, and everyone else. The Ethereum merger has finally happened after years and years of delays. This is when the proof of work Ethereum mainnet and the proof-of stake beacon chains will merge. It could occur as soon as Tuesday.
If you’re looking for a non-tech analogy for your normie friends, this one is from the Ethereum Foundation: “Imagine Ethereum as a spaceship that’s not quite ready for interstellar travel. The community has created a new engine with a toughened hull through the Beacon Chain. It’s nearly time to hot-swap engine from the old–mid flight after extensive testing.
Every person involved in crypto industry is watching this event closely – or should be.
The merger will make Ethereum’s blockchain faster, more scalable and 99% more efficient. The merger should be a blessing for Ethereum and both the network as well as the asset. It’s not clear if the price of ETH will actually rise after the merger, or if it’s “baked in” and won’t move, as we don’t do price prediction at .
The most fascinating part about all this is how it will affect all other cryptocurrencies or blockchains.
There is a world wide energy issue
Since proof-of-work Ethereum mining will cease, we’ll see the Ethereum network’s hashrate drop to zero immediately. This could put more pressure on Bitcoin’s large energy consumption, as Bitcoiners such as Dan Held admit. It will also put Bitcoin (without Ethereum as a co-offender) out of the reach of regulators targeting high-energy proof-of-work Blockchains.
The White House released a new report last week that praises Ethereum and raises alarms about Bitcoin. “Bitcoin is believed to account for 60%-77% of global crypto-asset electricity consumption, while Ethereum is estimated at 20% to 39 %…. There has been a growing demand for PoW blockchains adopting less-energy-intensive consensus mechanisms. Most notable reaction was Ethereum’s promise to launch ‘Ethereum 2.0’, which uses a PoS consensus method.
Bitcoiners, on the other hand, believe that proof of stake compromises network security. A large number of Ethereum miners are upset about the merge which will kill mining and leave them without affordable, usable machines. Could they instead flock to Bitcoin?
The second is the potential consequences for other top assets, including the so-called ” Ethyl killers”, such as Solana and Cardano, Avalanche and Polkdaot.
You might expect that a successful Ethereum merge will also be beneficial to these other proof-of-stake cryptocurrencies–and indeed, many of them got healthy boosts in the past week, presumably thanks in part to the merge buzz. However, it is possible to do the opposite: Many of these Ethereum challengers claimed that they are more eco-friendly than Ethereum. They lose this part of their value proposition once Ethereum has run proof of stake.
All of these matters are perception. Ethereum should stop critics ranting about NFTs destroying the rainforest. It should uncouple Ethereum and Bitcoin in discussions about crypto mining consuming energy. It could be, but it is possible that it will not. Mainstream narratives about crypto have been wildly misinformed and misleading.
As I have written, there are people who are louder and more proud than ever but will not give up on crypto.
While Ethereum developers insist that nothing is wrong with this merge, there are instances where scammers could manipulate uninformed users.
Finally, and this is the most important thing about the merger (and all of crypto), as my loyal column readers (all tens, tens, of them) know. Regulation is the greatest wild card. Gary Gensler, the SEC Chair, continues to state that Bitcoin is not a security. He does not mind that the CFTC has oversight of it. What about Ethereum? His personal opinion is not shared by him. Gensler and the current SEC regime consider ETH a security, contrary to what former SEC official Bill Hinman stated back in 2018.
Even if the Ethereum merger is a huge success, it won’t be much help long-term if it has the to deal with an SEC attack against ETH and other Ethereum-based tokens.