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Ethereum Merge is a massive, long-awaited shift in the technology that powers this second-most valuable cryptocurrency in the world. Some speculate it could be the time to buy or take profits… What you should know.
The so-called ‘Ethereum Merge’ refers to a significant upgrade to the blockchain technology that fuels the second-most valuable cryptocurrency in the world. Blockchain technology is what underpins other cryptocurrencies, as well as non-fungible tokens (NFTs).
Currently, the Ethereum blockchain, like the Bitcoin blockchain, runs on a proof-of-work model. These both involve nodes and computers that are part of a large network that compete with one another to resolve complicated math problems, according to Money. Those that do so successfully are then allowed to mine the next block of a transaction and create new coins. These systems have been criticized for its massive use of energy.
The upgrade of Ethereum’s blockchain technology will transition to the use of a proof-of-stake model, also called a “beacon chain,” one that is more energy-efficient, according to Nerd Wallet. The system works by the use of an algorithm that selects nodes via a preference for those which hold more of a network’s currency.
However, there are other significant reasons ‘the Merge’ is poised to be a major boon to Ethereum, perhaps helping it to surpass Bitcoin as the top cryptocurrency, as will soon be discussed.
The transition is expected to begin on September 6, and be completed sometime between September 10 and September 15, according to a blog post by the Ethereum Foundation.
Those cheering the benefits of the Ethereum (ETH) Merge say the new technology will give the cryptocurrency ultra-scalability, lower transaction fees, incredible energy efficiency, higher throughput capacity, and place it as the most important blockchain in the world, according to the Motley Fool. Many see this as an ironclad case for buying the digital coin.
Ethereum price rose over the summer, hitting a high of $1,984.72 on Aug. 13.
However, in the final two weeks of the month, the price has fallen to around $1,500.
Some believe it is a good time to “buy the dip,” betting that the price will rise once the Merge is complete and operable.
Some are warning investors this could be a classic case of “buy the rumor, sell the news.” In this scenario, investors would buy Ethereum up to the expected date of the Merge (as the price is down at the moment). Then, when the Merge takes place – sell as demand spikes and prices are expected to climb – taking profits.
Some are cautioning about the hype around the Ethereum Merge. For one, the co-founder of Ethereum has recently said that the Merge will only be “55% complete” this year. In light of this, some are warning that predictions that the Merge will be able to handle 100,000 transactions per second, would then be optimistic without the transition being 100 percent complete.
Some are warning investors to be leery of the four-part process of “surge, verge, purge and splurge.”
