The technology that supports the most important digital currency after Bitcoin is drawing close to a profound change that will affect its system and many other projects in the midst of the so-called “crypto-winter”.
The cryptocurrency market has been uncertain for months after the price crash experienced last April, which the most doomed analysts have compared to the dotcom crash.
The sharp drop in the price of Bitcoin after the collapse of Terra was followed by similar movements in the rest of the digital currencies, affecting the largest global operators, with bankruptcies of important companies included, in what has become known as the “crypto winter”.
The future of these currencies, as well as that of the technology that supports them, the Blockchain or blockchain, is unknown, although what is clear is that there is a very close event that promises to shake up the market again, both for one side or the other.
“The Merge”
This is “The Merge”, which is how the Ethereum Foundation – an organization after Ethereum, the second largest cryptocurrency after Bitcoin – has baptized the merger between its two networks, scheduled for September 15.
The Merge is an expected measure, dilated in time for years, by which the reward system of the so-called “cryptominers” is modified, those in charge of validating transactions and generating new blocks in the Blockchain.
With “The Merge”, Ethereum will modify its mining system, moving from the proof of work model, which uses a common consensus algorithm based on complex mathematical calculations, for which miners receive rewards, to the proof of stake model. The latter uses the number of cryptocurrencies of the miner to validate the transactions and create new blocks in the Blockchain and thus receive the rewards. In this way, a model that has been highly criticized for its high impact on the environment will no longer be used, due to the great energy consumption that it entails, for a less polluting one, since it does not need so much computing power to solve cryptographic calculations.
The importance of Ethereum is vital within the world of cryptocurrencies. In addition to having its own cryptocurrency, ether, whose capitalization is around 225,000 million euros, the Ethereum network constitutes a chain of blocks that works for an infinity of cryptocurrencies or tokens, some of them among the main ones in the market.
Disappointment
The price of Ethereum has increased over the past few weeks as the merger date approaches. But the expectations that had been put in that with “The Merge” significant savings would be achieved for the miners have been truncated when the foundation itself has denied it, this week.
The announcement has in recent days returned the currency to a downward trend, slightly exceeding 1,800 euros for each ether. It should be remembered that its maximum price exceeded, last November, 4,600 euros.
The so-called gas fees are the effort made by the miners’ computer equipment to carry out each transaction, which varies depending on the saturation of the network, and which, in any case, was reported to be high. Ethereum hopes to solve this problem in 2023, with a new remodel called “The Surge”.
In any case, the expected merger will affect the entire cryptographic system. In fact, analysts from entities such as J. P. Morgan already blame Ethereum’s announcements not only for the recent rise in its price but also for the current stability in the cryptocurrency market, which seems to have bottomed out after the deep decline a few months ago.
By Audy Castaneda
