The much anticipated Ethereum update, called The Merge, finally arrived.Vitalik Buterin, the co-founder of Ethereum, tweeted on September 15 to confirm The Merge.
The Ethereum network switched to a proof-of-stake consensus mechanism from an energy-intensive proof-of-work system after the Merge.
What is Ethereum 2.0?
The Ethereum network used a proof-of-work (PoW) consensus system before September 15, 2022.The network transitioned to a proof-of-stake (PoS) mechanism in an upgrade known as The Merge or Ethereum 2.0 on September 15.
Read more: Proof of work VS proof of stake
The Merge was originally referred to as Ethereum 2.0.The Merge upgraded the Ethereum blockchain to use a proof-of-stake consensus mechanism to perform verification through staking.
The new proof-of-stake mechanism replaces the proof-of-work system where miners use high-energy-draining computers to solve complex mathematical equations known as hashes.
This mining process requires high electricity usage to verify transactions before they are on the Ethereum blockchain.
The proof-of-work consensus mechanism requires a lot of electricity to verify transactions on the blockchain.
For example, Bitcoin mining currently consumes power at an annual rate of 127 terawatt-hours (TWh), which is higher than the power consumption of the entire country of Norway.
Experts say the use of the old proof-of-work consensus mechanism produced a carbon footprint similar to Switzerland.The Ethereum network is expected to reduce its carbon footprint by up to 99.95% post-merge.
This reduced carbon footprint will address one of the major criticisms of the Ethereum network.
Read more: What is the Ethereum merge?
What Happens To ETH When ETH2 Comes Out?
The Ethereum 2.0 upgrade is not a replacement for Ethereum but can be described as a merger.The Ethereum.org website also states that Ethereum 2.0 should not be considered a separate blockchain.
Ethereum 2.0 is not introducing a new crypto coin that will replace the current ETH coins.
Additionally, several users were hoping the upgrade would introduce low-fee criteria.The Merge will also not have any impact on the gas fee prices.
How Will Ethereum 2.0 Affect The Price Of ETH?
Let’s look back at the ether price history to see if we can determine future results.Past Ethereum performances should never be an indicator of future results, but knowing the crypto’s past performance can give us some context to make price predictions of our own.
The price of Ethereum has been on a volatile run with multiple peaks and lows over the years.The value of Ethereum rose to a then-record high of $1,419 in January 2018.ETH value would lose more than 90% over the next year and fall to $115 by January 2019.
Ethereum would take nearly three years to surpass its 2018 high, reaching an all-time high of $4,891 in November 2021.It has been a tough year for ETH, amid the crypto market slump.
ETH hit an 18-month low of $879 on June 18, 2022.
ETH traded at around $1,725 on September 9 as the excitement for the merger grew.ETH was trading at $1,630 once the merger was complete, but its price slid over the next few days.
With a market capitalization of $158 billion at the time of writing, ETH is still the second-largest crypto.
Let’s look at some ETH price predictions made by some prominent sources.
CoinCodex sent out mixed signals in its short-term ETH price prediction.CoinCodex expects the price of ETH to be around $1,169 by October 26, 2022.
CoinsKid predicts that ETH will be trading at around $4,580 by December 2025.
Digital Coin Price has a more optimistic view in its price prediction of ETH for 2030.It predicts ETH to trade at $18,179 by 2030.In its big ideas report for 2022, ARK predicts that the market capitalization of ETH will exceed $20 trillion in the next 20 years.
Conclusion
We still cannot predict what might happen after the Merge.Glitches are possible in new systems, so it is good to be cautious.There is also a risk that the Merge could cause liquidity problems for Defi protocols based on the Ethereum platform.
It is vital to point out that Ethereum could be just another proof-of-stake blockchain without its predecessor, proof-of-work.
Other players in this field, like Solana (SOL), Tron (TRX), and Avalanche (AVAX), have seen their prices drop over the last few months.
It will be interesting to see whether there is a boost or drop in ETH prices after The Merge.
It is important to note that experts and algorithm-based price predictors can be wrong.These price predictors should never be a replacement for your research.
You should invest or trade in crypto depending on your risk tolerance, portfolio size, investment goals, and expertise in the market.We should remember that future returns do not depend on past performances.
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