Crypto Event of the Year: The Merge
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September 16th, 2022. Aaand, it’s happening! The much-awaited Ethereum merge is finally on! During the past couple of months, crypto investors have been religiously following the “buy the rumour, sell the news” adage and stacking ether.
That’s why the token outperformed Bitcoin drastically and even sliced through the $2,000 resistance two months ago despite the bearish sentiment on the market. Some market experts were expecting to see Ethereum price skyrocketing right after the merge, while others were anticipating a sharp drop.
What is the merge actually (just in case you are not really sure you understand the concept), why the crypto crowd is going crazy about it, and what do we think is going to happen in the coming days? Find out in the following lines!
The Switch From PoW to PoS
Just like Bitcoin, Ethereum had been operating on the PoW (Proof-of-Work) consensus protocol for years. The PoW protocol requires miners to compete with other miners in solving complex mathematical puzzles. The first one who solves the puzzle gets the chance to validate a transaction and mine a new token.
PoS (Proof-of-Stake) is an alternative to PoW that practically eliminates mining and miners altogether. With PoS, random users of the network named blockchain validators who stake a certain amount of tokens (32 ETH or more in this case) get to validate new blocks.
PoS is way less power-consuming (and thus, eco-friendlier) than PoW, and, according to experts, less risky. However, it favours the ones with larger stake positions, giving them an advantage when validating blocks.
Either way, switching from the current PoW protocol to the Beacon Chain PoS network (that was introduced back in 2020) is what we call the merge.
Why Is Everyone So Excited About the Merge?
As previously mentioned, the merge announces the new, eco-friendly era for Ethereum. Making Ethereum less energy-intensive will finally put an end to the environmental debate and finally make the token much more attractive to the masses.
Next, the merge speeds up transactions a little bit and reduces software requirements. Instead of having to invest thousands of dollars into ASIC mining rigs, investors can simply buy and stake Ethereum to be able to validate blocks.
We also want to say that the merge won’t reduce ETH gas fees nor it will speed up transactions drastically yet. These updates are expected to be live not before 2023.
However, now that we’ve touched upon the topics of mining and mining equipment, let us ask you a question. Do you think that literally everyone is buzzing about the merge? Well, of course not…
Who’s Not Happy About the Merge?
A group of 60 miners led by Chandler Guo announced that they would create an Ethereum hard fork and a new token, too (ETHW or ETHPoW)! This group simply cherishes the idea of mining new tokens and advocates sticking to the PoW. The forked is expected to happen 24 hours after the merge. Now that the merge is finally done, we couldn’t wait to see what Chandler and his team are up to.
How Many Tokens Will Be There Anyways?
In the transition from PoS to PoW, or from ETH 1.0 to ETH 2.0, no new tokens will be created. Everyone who was holding ETH at the time of the merge remained with the same number of tokens on their wallets after the merge. Although there were no changes in users’ balance, numerous things and software updates were happening in the background.
So, ETH will remain ETH, but we’ll potentially be having one more token, ETHW, that is yet to be created. And then, there is the third token, ETC (Ethereum Classic), which is basically the original token, while ETH is its fork, and ETHW would be a fork of a fork.
Did the Merge Affect the Price of ETH?
Ethereum deposits and withdrawals were paused during the merge so that exchanges could do their part and ensure a smooth transition and allocation (or better said, swap) of tokens. Now that the merge is over, the trading activity is back.
Ethereum has been down for the past 2 days. It dropped from the $1,750 level to $1,560. The volatility of the market is huge and ETH has been bouncing between $1,560 and $1,650. In other words, it turns out that, despite the successful upgrade, ether struggles with breaking above the $1,650 resistance.
Market experts were hoping to see Ethereum above $1,750. However, this entire situation teaches us that we should remain cautious about the markets and stay away from buying in at critical resistance levels.
Still, buying the dip is a thing, and if you’re waiting to stack up some ETH at the best (and possibly the lowest) prices, use Lykke, the 0-fee crypto exchange. Even if you decide to sell some of your ether after some time, Lykke won’t be charging any transaction fees, again, allowing you to maximize your profits. Awesome, right? You can easily sign up by following this link and start enjoying the zero-fee crypto journey.
The crypto community couldn’t wait to see ETH 2.0 come to life! We truly witnessed a one-of-a-kind, historic moment in the crypto industry. The new era has begun! Let’s see what it will bring…