- Ethereum’s Merge is fast approaching, while the ETH price remains largely impacted by the raising market sentiments
- The ETH price closed the previous day’s trade at around $1696 with a market capitalization of $208.04 billion, but has dropped below $200 billion now
- While the Ethereum Merge event is looked upon as the greatest and most important event in the crypto space, the possibility of the asset flipping the star crypto, Bitcoin also emerges.
What is Ethereum?
Ethereum is a decentralized blockchain specifically designed to be scalable & secure, supporting smart contracts which are an essential tool to build dApps. The largest crypto asset after Bitcoin, Ethereum was created by Vitalik Buterin along with Joe Lubin, founder of ConsenSys.
The platform currently works on a Proof-of-Work(PoW) Consensus mechanism where-in the Ethereum-miners, mine new ETH and add it to the existing chain. Hence consuming more time and power in validating a block and adding it to the chain, similar to that of Bitcoin, currently.
However, after the upcoming Merge, Ethereum will be the first chain in the crypto space to undergo a complex transition from Proof of Work to a Proof-of-Stake(PoS) mechanism. The platform is backed by its native token Ether(ETH) which is the second largest crypto as per the market capitalization, next to Bitcoin.
Upcoming Ethereum Merge
The Ethereum Merge which has been making rounds for more than 6 years now, is very closer to getting accomplished. The journey began much before in December 2020, with the launch of Beacon Chain amid Phase 0 of ETH 2.0. Later several Testnets, upgrades and updates were rolled out.
In the next 20 days, the Ethereum Mainnet is set to be merged with the Beacon Chain. Hence the name ‘Ethereum Merge’.
Beacon Chain is a secured Proof of Stake consensus algorithm that began functioning on December 01, 2020. Since its inception, it has been running parallel to the Ethereum Mainnet but hasn’t been processing any transactions.
The final Testnet, Goreli went live a couple of weeks ago and has not reported any major technical setbacks as of now. Hence paving way for the Mainnet Merger on September 19, 2022.
The Ethereum Network after the Merge is expected to be more scalable and will be able to process 100,000 transactions per second. However, the Merger is just the beginning of the protocol’s development phase which will be followed by The Surge, the Verge, the Purge & the Splurge.
Ethereum 2.0 vs Bitcoin
Bitcoin in recent times has been heavily criticized for being not green crypto as the mining process consumes huge energy hazardous to the environment. However, Ethereum was also sailing in the same boat, but the upcoming event is set to rise the second-largest crypto a set ahead, or may even dethrone Bitcoin in the coming days.
|Working on the same PoW consuming huge energy||Work on PoS mechanism, being more environmentally friendly|
|Transactions to be processed is around 3 to 7 in 10 minutes||The transactions per second is expected to rise to 100,000 from around 25|
|Bitcoin’s total supply is limited and hence cannot be fully a deflationary asset||The Ethereum platform after the transition may drop the issuance of the new tokens by 90%. Moreover, the ETP 1559 upgrade could continue to burn ETH , aiming to make the asset deflationary|
|Bitcoin will continue to be a Digital Gold||But Ethereum will have a larger adoption based on a DeFi economy|
Will ETH overtake Bitcoin After the Merge?
- As seen in the above comparison between the ETH & BTC price rally, Ethereum has maintained a significant strength and appears to have outpowered Bitcoin
- While Ethereum price was swinging within an ascending parallel channel, Bitcoin price at the same time maintained a stagnant trend as price plateaued
- Moreover, after the recent price drop, the ETH price rebounded and began with a recovery phase, while BTC price is still hovering within a very narrow range along the average levels
- However, the ETH price despite a pullback, is attempting to rise high by undergoing a flip. Conversely, the Bitcoin price continues to agitate the traders with a squeezed trend.
While Bitcoin continues to work on its native chain, the newly improved Ethereum Chain may eventually outperform the star crypto in the coming days.
Additional Read: Ethereum Price Prediction Weekly