What is the Ethereum merge? Price soars as crypto prepares for HUGE boost
ETHEREUM is seeing its stock price climb as it steadily approaches "the merge".
On Tuesday, Ether hit a two-and-a-half-month high as its value soared to $3,470 by midday, bitcoin.com reported.
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What is the "Ethereum merge"?
Ethereum currently utilizes a "proof-of-work" (PoW) system, in which miners validate transitions by completing arbitrary puzzles.
PoW also deters malicious actors from gaming the system, however, it expends a large amount of computer power.
To address that issue and its related environmental consequences, Ethereum is moving to, or "merging" with, Beacon Chain's "proof-of-stake" (PoS) system.
Unlike PoW, Beacon's system lets users validate transactions according to how many coins they contribute, or "stake".
What does "the merge" mean for Ether?
If Ethereum's merge with Beacon's system is a success, this could mean a number of things for the cryptocurrency.
For starters, PoS would render traditional crypto mining on Ethereum obsolete, which would greatly reduce the blockchain’s environmental impact.
Ether's demand and value will also likely go up because fewer coins are expected to be issued post-merge, Fortune reported.
"The market will be pricing this change in for months. If the merge is successful, ETH will be one of the most popular crypto assets for institutional investors for the foreseeable future."
What are the risks?
Cryptocurrencies are some of the most volatile stocks a person could trade given their decentralized nature.
Therefore, there are inherent risks associated with both trading Ethereum and "the merge".
“I think non-crypto natives are becoming aware of the merge for the first time. There really wasn't much discussion of the merge outside of crypto channels until a few weeks ago,” Hougan said.
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"[There's] understandable excitement, it's worth noting, of course, that it's not without risk: It's a very high stakes technological upgrade, and there are risks it could be delayed or there could be issues in the implementation," Hougan added.
It's unclear at the moment when the merge is expected to happen, but some experts think it may happen this summer, according to Fortune.
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