Ethereum ((((ETH 8.68%). I’ve been playing the second fiddle for a long time Bitcoin (Cryptography: BTC) Despite the fact that in the crypto world, many of the most exciting innovations in crypto space (including the creation of NFTs and smart contracts) actually started on the Ethereum blockchain. According to market capitalization, Bitcoin is still almost twice as big as Ethereum, and many casual investors are watching BTC prices closely, but with little or no attention to what’s happening at ETH. I don’t seem to pay.
But that all could change later this year. That’s when ETH could eventually overtake BTC. the Cryptography After making the long-awaited changes to your technical infrastructure, you need to retain your portfolio.
Why “The Merge” is such a big moment for Ethereum
The event that crypto investors are paying attention to is “merge, “And it has gained a legendary position in the world of cryptocurrencies. This is the moment when Ethereum officially transitions from proof of work to proof of stake consensus mechanism. It’s hard to date this transition exactly-now we’re targeting early fall 2022, but when that happens, Ethereum will experience a major upgrade to its features. Proof of Work is an old-fashioned model still used in Bitcoin, while Proof-of-Stake is a new and innovative model used in emerging blockchains.
For the average main street investor, what you need to know is that the transition to Proof of Stake will reduce energy consumption by the Ethereum blockchain by as much as 99%. This is huge because proof of work requires crypto mining, and crypto mining is one of the most energy-consuming activities in the world. In fact, China has banned all crypto mining in the country because the electricity consumption by crypto miners is so high. According to an analysis conducted by the New York Times in late 2021, Bitcoin uses more electricity than many countries, including Finland, Sweden and Denmark. Proof of Stake completely abolishes this system. When the Proof of Stakes are finally implemented, crypto mining on the Ethereum blockchain will disappear. With Proof of Stake, miners solve complex computational problems and no longer compete to validate new transactions on the blockchain. As a result, you no longer have to use sophisticated and expensive mining rigs, which significantly reduces power consumption.
At the same time, the Ethereum blockchain congestion is cleared overnight, making all transactions much faster. Everything you do on the Ethereum blockchain will be faster, cheaper and more efficient. Transaction fees (known as “gas charges”) can drop dramatically, making it easier for casual users to access Ethereum. For example, for now, NFT gas prices purchased from the popular OpenSea Marketplace could range from $ 35 to $ 40. In contrast, gas charges for the same transaction using the Proof of Stake blockchain can be as low as $ 0.01. Therefore, if you buy NFTs on the Ethereum blockchain in the future, you will soon notice the difference.In addition, Ethereum will be in a much better position to dodge competitors such as: avalanche (Cryptography: AVAX), Solana (Cryptography: SOL) When polka dot (Cryptography: Dot)All already have a proof of stake blockchain.
Difficulty of merging
This all sounds great, but the problem here is timing. Ethereum has long promised “The Merge”. Yes, there has been considerable progress, but for some reason the date continues to be postponed. The large Ethereum Developers Conference in Denver earlier this year seems to have reached a consensus that June 2022 will be the day of the “merger”. But in April, the date was suddenly pushed back to the second half of the year. On the other hand, blockchain rivals like Avalanche and Solana seem to be becoming more and more popular day by day. For example, many people buy and sell NFTs on the Solana blockchain because they are faster and cheaper than the Ethereum blockchain.
Ethereum’s long-term outlook
But at some point, Ethereum plans to make “The Merge” a success, which will be big news not only for crypto investors, but also for those concerned about the power consumption of Proof of Work. Blockchain.. Not only will the new Ethereum be faster, cheaper and more efficient for users, but it will also be more environmentally friendly and environmentally friendly with less energy demand. When everyday investors awaken to the fact that different blockchains work differently and have a significant impact on key factors such as throughput capacity and transaction costs, Ethereum can eventually overtake Bitcoin. I can do it.