After years and years of delay, the Ethereum integration is upon us. The event, formerly known as Ethereum 2.0, when the Ethereum Proof of Work network is combined with the Proof of Stake signal chain, could happen as soon as Tuesday.
(If you want a tech-free analogy of Normi’s friends, I love this geeky analogy from Ethereum Foundation Herself: “Imagine that Ethereum is a spacecraft not quite ready for interstellar flight. With the Beacon Chain, the community has built a new engine and a solid chassis. After conducting important tests, it is almost time to quickly swap out the new engine in the middle of the old flight.”)
Everyone in the cryptocurrency industry has their eyes on this event – or it should be.
The merger will almost immediately make the Ethereum blockchain faster, more scalable, and 99% more energy efficient. It should, in theory, be great for Ethereum (both the network and the asset). Whether the ETH price is actually moons after the merger, or whether it’s really “baked” and not budge, nobody’s guessing – and we’re not expecting any price at Decrypt.
But the most interesting part of all of this to me is how it will affect all other cryptocurrencies and blockchains.
First, there is the energy issue.
We will be able to see the hash rate of the Ethereum network drop to zero immediately, as the Ethereum Proof of Work mining will come to an end. This could lead to more public pressure on Bitcoin’s massive energy use, something Bitcoin clients like Dan Held acknowledge. It would also leave Bitcoin alone (without Ethereum as a guilty fellow) in the eyes of regulators who are targeting energy-intensive proof-of-work blockchains.
Just last week, the White House, in a new report on crypto and energy use, appeared to praise Ethereum and sound an alarm about Bitcoin: “Bitcoin is estimated to account for 60% to 77% of all electricity use in crypto assets globally, and it is estimated that Ethereum accounts for 20% to 39%… There have been increasing calls for PoW blocks to adopt less energy-intensive consensus mechanisms. The most notable reaction was Ethereum’s promised launch of ‘Ethereum 2.0’, which uses PoS consensus mechanism.”
On the other hand, bitcoin traders say that proof of stake sacrifices network security. A large number of Ethereum miners are unhappy with the merger, which will kill the mining and leave them with expensive and unusable machines; Could they stream bitcoin instead?
Secondly, there are potential ramifications for other coins besides the two big dogs, especially the so-called “Ethereum killers” like Solana, Cardano, Avalanche and Polkadot.
You might expect the successful Ethereum merger to come in handy for these other proof-of-stake cryptocurrencies — in fact, several of them have received healthy boosts in the past week, presumably due in part to the hype of the merger. But the opposite is also possible: many of Ethereum’s competitors have positioned themselves as more environmentally friendly alternatives to Ethereum. Once Ethereum runs Proof of Stake, it loses that portion of its value proposition.
Of course, these are all matters of image and perception. Ethereum Moves to Proof of Stake should Calm critics who are screaming about how the NFT is destroying the rainforest. He. She should Separate Ethereum from Bitcoin in conversations about mining energy-intensive cryptocurrencies. But that may not happen either, as the dominant narratives about cryptocurrencies have always been wildly misleading and misleading. There are people (louder and prouder than ever before) who will never get around to cryptocurrency, no matter what.
And while Ethereum devs insist that there is nothing major that can go wrong with the merge, “the confusion surrounding the event could lead to increased cases of fraudsters manipulating uninformed users,” DecryptSander Lutz points out.
Finally, as loyal readers of the column know all too well (all dozens of them and dozens, says Dean Winters from Allstate’s recent “Mayhem” ad), I think the biggest wild card after consolidation, for all cryptocurrencies, is regulation. SEC President Gary Gensler continues to state that Bitcoin is not a security and that he doesn’t mind the CFTC overseeing it. What about Ethereum? He will not share his opinion. It is widely believed that Gensler and the current SEC system see ETH as collateral, despite what former SEC official Bill Henman said back in 2018.
Even if the Ethereum merger is hugely successful, it won’t help much in the long run if it has to account for the SEC’s attack on ETH and all other Ethereum-based tokens.
Watch the news closely during the week of the consolidation. stay with us at Decrypt , Where our reporting team will be around every corner.
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