Ethereum's Planned Merge: Big Impact for Cryptocurrency Developers
Ethereum's planned Merge will have a big impact on cryptocurrency, especially for those – like decentralized application (DApp) developers – who depend on Ethereum to do their work.
The Ethereum Merge is not a siloed event. It will cause changes and reactions in the Ethereum ecosystem that will ripple outwards. This could have a positive impact on the overall health of the network and lead to more widespread adoption of Ethereum-based technologies.
As the crypto asset industry continues to grow and become more mainstream, Ethereum and its native coin Ether (ETH) will continue to be major players. ETH is already the second most popular altcoin, with people searching Google for “Ethereum” an average of 2.1 million times a month. And as more and more developers build decentralized applications (DApps) on the Ethereum blockchain, ETH's value is only expected to rise. In a survey conducted by the Bybit crypto exchange, Ether is the second most heard-of alternative to Bitcoin (BTC), with one in six United States adults saying that they’re familiar with it (15.4%). There’s no doubt that Ethereum and Ether will continue to be major players in the crypto world for years to come.
The Ethereum Merge is a significant change to the Ethereum blockchain that could have far-reaching implications for the cryptocurrency industry as a whole. By improving scalability and security while reducing energy usage, the Merge could make Ethereum a more attractive option for businesses and investors. This, in turn, could lead to more mainstream adoption of cryptocurrency and blockchain technology.
The Merge is a simple, yet powerful tool for managing your code.
The Merge is an important part of the Ethereum blockchain's transition to a more scalable network. This transition, often referred to as Ethereum 2.0, began in late 2020 with the launch of the Beacon Chain. The Beacon Chain is a proof-of-stake (PoS) version of Ethereum that is designed to be more scalable than the existing proof-of-work (PoW) blockchain. The Merge will allow the Ethereum network to take advantage of the best features of both PoW and PoS systems, making it more scalable and efficient.
The Merge is expected to occur on Sept. 15, and it represents an end for the PoW chain. All future efforts and attention will be focused on the PoS chain. The PoW vs. PoS debate has been a long-standing issue in the crypto and blockchain sector. Some of the arguments in favor of PoS blockchains include that they require less energy than PoW networks.
Ethereum Looks to the Future After Merge
It's official: the Ethereum network will be moving to a proof-of-stake (PoS) consensus algorithm, with the existing proof-of-work (PoW) chain becoming a thing of the past. This change will be facilitated by a "difficulty bomb" that will reduce mining rewards and make mining on the PoW chain increasingly unattractive. There has been some discussion of miners resisting this change and continuing to mine on a forked PoW version (or versions) of Ethereum, but it seems likely that the vast majority of miners will switch to the PoS chain once it becomes the main Ethereum blockchain.
With the recent merge of the Ethereum blockchain, validators will now be responsible for running the network instead of miners. In order to support the blockchain's function, validators must lock up 32 ETH. However, they will be rewarded for their contributions. Other methods for contributing to the network, such as staking, will still be available.
The Merge is not the end of Ethereum's broader transitional journey. The event marks just over the half-way point in Ethereum's transition — 55% of the way to completion to be precise, according to Ethereum co-founder Vitalik Buterin. Sharding is the next major goal for Ethereum, which aims to improve scalability via segmenting the blockchain into parallel portions. Buterin believes that sharding will be a key enabler for Ethereum to reach its full potential as a decentralized platform that can power a wide range of applications.
Merge: Debunking the Myths
There are some common misconceptions about the Ethereum Merge. Some people believe that Ethereum will become faster and have lower transaction fees overnight. However, this is not the case. The merge is a gradual process, and it will take time for Ethereum to reach its full potential. In the meantime, we can expect Ethereum to continue to be a reliable and secure platform for transactions and smart contracts.
Some have wondered whether the recent Merge between Ethereum and Ethereum Classic would result in a flood of unstaked ETH hitting the market. However, this is not the case. In reality, staked ETH is going to remain locked until the Shanghai upgrade, which is scheduled for 2023. This is good news for those holding Ethereum, as it means that the price is unlikely to be affected by a sudden influx of new ETH.
It is difficult to predict how the market will respond to the ETH upgrade. Some observers believe that the price will increase due to the upgrade, while others believe that it will become a "sell the news" event and the price will drop. It is important to monitor the market closely and make decisions based on market conditions.
It is difficult to make any prediction about the future of the crypto market with certainty, due to the downward price action that has already been seen. However, traders may still be able to capitalize on this situation by taking advantage of competing predictions.
Merge Trading: 3 Strategies to Help You Profit
If you're looking to capitalize on bullish investor sentiment ahead of the Ethereum 2.0 "Merge," there is a case to be made for holding regular ETH, which is also known as "spot." If your investment funds are sizable enough, you might even consider holding the 32 ETH required to become a validator for the network, earning around 4% interest annually. That number is expected to rise to roughly 7% post-Merge.
If the price of Ethereum doesn't surge quickly enough for you to win a 1,000% return this year, your assets will at least continue working for you during the market doldrums. (Just keep in mind that your 32 ETH will remain locked until the Shanghai upgrade sometime in 2023.)
If you're looking to hedge your ETH holdings, one strategy is to invest a small portion of your portfolio in futures contracts. This can help offset any short-term losses you experience on your spot holdings. However, if the market goes up, you may lose money on your futures contracts.
When it comes to investing in cryptocurrency, there are a few different approaches that traders can take. One is to "sit" in stablecoins, which can be a reasonable option if the market is volatile and the trader is not confident about which direction it will take next. Another approach is to try to capitalize on extreme movements when they happen, by either going long or short. This can be risky, but can also pay off if the price of ETH makes a big move.
If you're thinking about becoming an active trader, be aware that the majority of people who do so end up losing money. Your best bet for success is to pick a price point, make your purchase, and then forget about it until market conditions become favorable again.
Does Your Exchange Support Airdropped ETH?
What does this mean for you? If you own ETH on a centralized exchange, you will want to keep an eye on whether or not your exchange will give you your "airdropped" Ethereum.
It's clear that the transition from proof-of-work to proof-of-stake will be a complex one, with a lot of moving parts. But with careful planning and execution, it seems possible that the Ethereum community will be able to make a successful transition.
It is important to note that users who have their ETH tokens held in complex financial protocols may want to withdraw their holdings a few days before the protocol merge. This is to ensure that their ETH holdings are recognized by the blockchain.
As we approach the Ethereum blockchain merge, it's important to be aware of potential downtime for exchanges. Many exchanges are planning to disable deposits and withdrawals of ETH and ERC-20 tokens on September 14th. Most exchanges should have these activities back up and running by September 16th, but that date could change if there are unforeseen technical issues. Stay informed and be prepared for a potential brief period of disruption to ETH and ERC-20 token trading.
DApp users will benefit from new Ethereum update!
The crypto and blockchain industry is a vastly interconnected space. Ethereum itself hosts almost 3,000 DApps on its blockchain as of time of publication, according to State of the DApps. One example of Ethereum’s significant impact on the overarching crypto sector can be seen when looking back at the high Ethereum fees present in 2021, which may have deterred some DApp users. The crypto and blockchain industry is constantly evolving, with new applications and uses being found all the time. Ethereum is at the forefront of this industry, and its impact can be seen in the way that it has shaped the sector over the past few years.
The Ethereum 2.0 movement could have a significant impact on the energy required to run the Ethereum blockchain, as well as increasing security and scalability. The Merge is just one part of this transition, and it looks to operate slightly quicker while using less energy. Other benefits of the Ethereum 2.0 transition may take more time to materialize, but they could have a significant impact on the Ethereum network as a whole.
The ETH coin supply is not capped, but the amount of new ETH that can be created each year is limited. The Ethereum Improvement Proposal 1559 put in place an ETH burning mechanism based on transactions, which will decrease the amount of new ETH created annually. This could potentially affect the asset's price activity in the market.
The opinions expressed in this article are the author's alone and do not necessarily reflect the views of Cointelegraph. This article is for general information purposes only and is not intended to be and should not be taken as legal or investment advice.