One of the big news in the cryptocurrency market 바이비트 한국어 over the past few months is Merge, one of the Ethereum upgrades. Ethereum has never missed its second place in the past decade after Bitcoin, the No. 1 virtual currency market capitalization. It’s also called the captain of the so-called Alternative Coin. Ethereum’s Price Fluctuation
Ethereum’s price peaked at $4,875 in November 2021 and fell to $886 on June 19, 2022 due to unfavorable factors such as the Russo-Ukraine War and the Terra Crisis, reducing it to 1/5.
Since then, Merge, scheduled for September 15, 2022, has been a boon, recovering to $2,2023 on August 14, showing a rise of more than 100%.
However, when Chairman Jerome Powell mentioned maintaining austerity by showing his hawkish side on August 14, when the Jackson Hole meeting was held, he failed to maintain the upward trend and is currently on a roll around $1,600.
Today, we will summarize the key contents of the Ethereum update process, Merge, which is just around the corner (September 14-15).
What is the Ethereum update ‘merge’? What is the benefit of the merge?
Merge is a step in the long run of the Ethereum 2.0 update. The Ethereum 2.0 update process has major characteristics at each stage. In the first stage, Merge, the company will switch from the existing work proof method Pow (compensated by mining with a graphic card, huge power consumption) to the equity proof method Pos, which receives compensation in proportion to the quantity of Ethereum.
The method of updating is to first move the current blockchain, which is a work proof method, to a test net called beacon chain, which is operated by equity certification method. It’s like building a new highway and now it’s completed, so it’s similar to the process of moving cars on existing highways.
Meanwhile, Merge is the beginning, not the end, of the Ethereum 2.0 update, and the biggest feature is the transition to equity proof.
When the merge is complete, the key changes that occur first are as follows:
First, the amount of Ethereum, which was supplied to miners every year by 4% proof of work, will be frozen, reducing the rate of Ethereum growth. This is a positive effect on price increases according to the law of supply and demand.
Second, existing Ethereum owners will stick to Proof of Work (Pos) and receive the Ethereum W (ETHW) that will be created as a new hard fork (free of charge). It’s like getting a free capital increase or a dividend.
Third, the proof of work method, which used to solve computational problems using high-end graphics cards, is no longer needed, so it is possible to save a lot of electricity used for Ethereum mining. Of course it helps the environment as well-being of the environment.
The world’s gold mining costs 240 terawatts, which is more than that used to watch YouTube. It takes 112 terawatts of energy to mine Ethereum If you switch to the Pos method, this power consumption will be reduced to 0.01 terawatts. It’s going to be reduced by more than 99.99%.
On the other hand, as is well known, there will be no immediate increase in transaction speed or a significant decrease in Ethereum transaction fees. Because the merge update itself is not aimed at these. The increase in transaction speed and the increase in commission fees should be expected in future updates.
What investment strategies can be taken before and after the Ethereum Merge update?
First of all, I told you that miners who want Ethereum of the existing work method can make Ethereum W through a separate hard fork, and existing Ethereum holders can airdrop Ethereum W. To receive this, you need to have Ethereum in a personal wallet such as a meta mask or an exchange that supports ETHW airdrop. On the other hand, if you buy Ethereum to receive Ethereum W, the price of Ethereum itself may fall, so many people also use the strategy of buying Ethereum on spot exchanges such as Upbit and hedging by holding a short position of 1 times on futures exchanges. It is a strategy that can only take the value of Ethereum W while preserving the value of Ethereum itself. Note that ETHW air drops are not available if you are using services such as Lido or Ethereum 2.0 Staking.
On the other hand, there is also a strategy to buy stETH or bETH that can be exchanged 1:1 with Ethereum after the Ethereum merge update is completed, and then exchange it with Ethereum after the Ethereum merge update to make a profit.Currently, stETH is known to be available at 3% cheaper than Ethereum.
Today, we’re going to briefly talk about The Merge, the first stage upgrade of the Ethereum 2.0 update that’s just around the corner.