A huge event may soon change the cryptocurrency market as we know it. Investors call it The Flippening or the Ethereum Merge, which may turn Ethereum (ETH) into the number one digital asset worldwide.
The best part is that we now have an official Ethereum Merge countdown that will end in four days. In response, you and other investors should know how this would affect your portfolio and the world.
We will start with a brief explanation of The Merge and its effects on Ethereum. More importantly, we will discuss how it could transform the cryptocurrency market and the global economy.
What is The Merge?
Photo Credit: coingape.com
Ethereum will soon combine its main network or mainnet with the Beacon Chain. As a result, ETH could significantly expand its use cases and reduce its carbon footprint.
Ethereum is the cryptocurrency network that uses Ethers or ETH as its native crypto. The latter is the second-largest cryptocurrency in market capitalization or market cap.
Its current iteration follows the proof-of-work (PoW) model, so it operates with the help of volunteer miners. These people confirm ETH transactions to earn more Ethers.
However, it has been a target of controversy for many years. For example, many critics lambast Ethereum as a major polluter on the planet. Also, they have noted its high transaction costs, a.k.a. GAS fees.
Ethereum has been forming a solution by testing a proof-of-stake (PoS) model. Instead of relying on miners, users may deposit Ethers to a select group of validators. As a result, it would work like a savings account with potentially higher returns.
According to the official Ethereum Merge countdown, this event will occur roughly four days from now. Specifically, we may expect The Merge on September 15, 2022. We may expect the following changes to Ethereum:
More energy efficiency, smaller carbon footprint
Photo Credit: gulfcrypto.ae
Ethereum’s managers say The Merge will slash ETH’s energy consumption by 99.95%. It would remove the need for substantial mining farms and their energy-guzzling machines.
More processing power facilitates crypto mining, so people worldwide invest in high-end computers and graphics cards. In turn, they consume vast amounts of electricity and increase their country’s carbon footprint.
That is why many news outlets and experts have criticized cryptocurrencies for years. Fortunately, the new proof-of-stake model would not require users to invest in these devices. As mentioned, they only need to deposit their coins to validators to earn passive income.
Reduced supply, increased value
Photo Credit: www.marketwatch.com
The co-founder of the digital asset trading platform InvestDEFY Aaron Samsonoff expects a 90% drop in new Ether issuance following The Merge. As a result, ETH may significantly increase in value.
This prediction follows the traditional supply and demand rule of economics. Simply put, prices increase as supply drops and demand expands. Moreover, the new staking model could make it easier for new investors to use Ethereum.
As a result, we may see more ETH transactions worldwide. Note that we cannot guarantee how people would respond to the new model. Ethereum miners may sell their graphics cards en masse, which may cut the price of ETH.
More users and applications
Let us say you want to mine Bitcoin (BTC) at home. You will need to spend thousands of dollars on a high-end computer to have enough computing power. On the other hand, Ethereum staking only takes a few taps!
You can start for free using numerous investment apps like Coinbase and Binance. Once the Ethereum Merge completes, you may easily deposit your Ethers with the same apps.
Nowadays, Ethereum enables several use cases like non-fungible tokens. NFTs record ownership of physical or digital items on a cryptocurrency network. Also, it allows dapps or decentralized apps, decentralized finance, and yield farming.
These services come from cryptocurrencies that rely on Ethereum. These crypto networks could quickly grow and improve if The Merge brings more users. As a result, the entire crypto market could benefit more people worldwide.
Conclusion
The Philippines’ digital transformation has been going into full swing lately. The government has been exploring its uses in essential services such as emergency aid and healthcare.
Other countries like Singapore and Switzerland have also increased online searches for the Ethereum Merge. Overall, the world will soon change because of these innovations, and various nations anticipate them.
In response, everyone should learn more about cryptocurrencies and other tech trends. Fortunately, Inquirer Technology is an excellent source of the latest tech updates!
All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by Inquirer.net constitutes an investment recommendation, nor should any data or Content published by Inquirer.net be relied upon for any investment activities.
Usa.inquirer.net strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.
Frequently asked questions
Will the ETH merge happen?
The Ethereum Merge now has an official countdown that specifies its launch for September 15. However, we cannot guarantee that it will truly launch on that date.
Why is the Merge important?
It would make Ethereum more user-friendly and dominant in the crypto market. Some say it may cause The Flippening, the moment when Ethereum dethrones Bitcoin as the number one cryptocurrency.
What is proof-of-stake Ethereum?
Ethereum staking would allow people to earn passive income from Ethereum. People expect the feature to activate once The Merge occurs between September 10 and 20.