After some changes in plan and inadvertent delays, Ethereum’s mainnet will finally merge with its Beacon Chain in the coming months, fully transforming the platform’s consensus mechanism from Proof-of-Work to Proof-of-Stake.
After some final tests were conducted during mid-March 2022, the news coming from crypto media sources is that Ethereum’s next major upgrade ‘The Merge’ will most likely occur in the second or possibly third quarter of this year.
The upgrade essentially involves merging of the Ethereum mainnet with its Beacon Chain, bringing an end to its Proof of Work consensus mechanism. This is in line with the roadmap laid out for the blockchain by the Ethereum Foundation, a non-profit organization which supports the network.
With excitement building around this significant upgrade, Ether (ETH) successfully outperformed Bitcoin in terms of value appreciation this past month. It gained 17.5% as compared to 1.1% increase registered by the BTC over the last 30 days. The past one year’s gains are even more impressive, with ETH standing at 54.1%, as against BTC’s -26.9%.
Ethereum/USD Daily Price Chart (Source: CoinMarketCap)
Ongoing debate vs BTC
Ethereum’s performance has inspired some discussions on how long its bullish run could last. Many believe that the upcoming upgrade will lay grounds for ETH to overtake BTC as the largest crypto in the world (by market cap). This phenomenon is normally referred to as ‘flippening’ in the crypto parlance.
Both Ethereum and Bitcoin presently employ Proof-of-Work consensus mechanism, which involves miners competing against each other for processing new transactions on the network, by solving complicated math puzzles. Although some argue that PoW mechanism delivers higher security owing to its more decentralised nature, it also consumes a lot of energy and requires heavy fees for transaction processing.
Not all are for ETH
Even though many people are bullish on ETH right now, there are no guarantees that it will indeed race past BTC in the times to come. Eliezer Ndinga, Head of Research at 21Shares, a crypto asset management company echoes the same sentiment. In an interview to Distributed Ledger he said, “Despite the fact that there is a lot of innovation happening on Ethereum and Ethereum has the largest developer ecosystem, bitcoin has a different use case”.
The ongoing Russia-Ukraine war has once again highlighted Bitcoin’s role as the most valuable cryptocurrency in the world. While Ukraine raised around $64 worth of crypto donations (including Bitcoin and Dogecoin), Russia expressed it may accept BTC payments for oil.
Having stated the above, please note, Ethereum is a different network altogether. It is currently fuelling the unfolding of Web 3.0, with a solid ecosystem of dApps and NFTs flourishing on it.