The transition of Ethereum (ETH) from Proof of Work (PoW) to Proof of Stake (PoS) algorithm is expected to finally happen in August. Dubbed “The Merge”, the change is part of the Ethereum 2.0 upgrade. The merger could be one of the most influential events in cryptocurrency history, impacting Ethereum both technically and economically.
In this article, we will discuss:
What is Ethereum?
Ethereum is a software platform based on blockchain which is primarily used to support the world's second largest cryptocurrency by market capitalization after Bitcoin. Like other cryptocurrencies, Ethereum can be used to send and receive value globally and without third parties observing or intervening unexpectedly.
Exchange of value is the primary use case for the Ethereum blockchain today, often through the blockchain’s native token, ether. But many of the developers are working on the cryptocurrency because of its long-term potential and the ambitious vision of its developers to use Ethereum to give users more control of their finances and online data.
The ambitious idea – which sometimes leads to Ethereum being called the “world computer” – has been met with its share of critics who say it is unlikely to work. But if this experiment goes as planned, it would spawn very different apps from Facebook and Google, in which users knowingly or unknowingly trust their data.
Ethereum enthusiasts aim to give back control to users with the help of a blockchain, a technology that decentralizes data so that thousands of people around the world receive a copy. Developers can use Ethereum to build leaderless apps, which means that a user's data cannot be tampered with by the service's creators.
Ethereum was first proposed in 2013 by developer Vitalik Buterin, who was 19 years old at the time, and was one of the pioneers of the idea of expanding the technology behind Bitcoin, blockchain, to more use cases than transactions. While Bitcoin was created with the aim of disrupting day-to-day and online banking transactions, the creators of Ethereum intend to use the same technology to replace Internet third parties with those who store data, transfer mortgages and track complex financial instruments. .
These apps help people in countless ways like opening a way to share vacation photos with friends on social media. But they have been accused of abusing that control by censoring data or accidentally spilling sensitive user data in hacks, to name a few. The platform was officially launched in 2015, turning the idea of Ethereum into a real and working network.
How will the merger change Ethereum's operation?
The transition to PoS from PoW will change the way the Ethereum blockchain verifies transactions. Instead of consuming large volumes of computing power to validate and create new blocks, miners will stake ETH coins on the network, dramatically reducing energy consumption.
In terms of proof-of-stake, a validator is randomly chosen to finalize a block based on the amount of Ether staked. This happens before the block, so no other participants are trying to finalize the same block, reducing Ethereum's power consumption by around 99,95%.
PoS will also improve the economics of the Ethereum blockchain, as under PoW Ethereum issues 5,4 million ETH to miners annually, but will issue around 0,5 million ETH to interested parties. This will reduce inflation and could cause Ether to become deflationary as a portion of the fees for each transaction will be burned, decreasing the overall coin supply.
'The Merger' will have no further impact on ether holders. It is not expected to affect tokens or smart contracts running on the blockchain. Decentralized applications (dApps) should work as before. 'The Merge' will not significantly increase Ethereum's scalability, as the introduction of shards, which divide a blockchain into smaller sections, will be introduced next year.
Approaching update does not support ETH price
The price of the ETH coin has been falling in recent months despite 'The Merge' approach as cryptocurrency markets have turned bearish, especially since the collapse of the TerraUSD (UST) stablecoin and accompanying token LUNA in May. The ETH price started the year at $3.683,05 and rose to $3.876,79 on January 4th. It then dropped to $2.172,30 on Jan 24 as cryptocurrency markets sold off. While the coin rose to $3.271,32 on Feb 10, on Feb 24 it traded to $2.308,91.
The market again tried to stage a rally, trading as high as $3.573,96 on April 3, but ETH failed to sustain gains, again falling. With the Terra crash, the ETH price dropped below the $2.000 level to $1.748,30 on May 12. A further sell lowered the price to $896,11 on June 18, its lowest level since late 2020. ETH had risen to the $1.150 level at the time of writing on June 24.
Ethereum Price Forecast: Is the Coin a Buy or Sell?
Technical analysis has shown that short-term sentiment on the ETH price is bearish at the time of writing. The coin was trading below the 21-, 50- and 100-day moving averages (MA), indicating an overall bearish trend. It was above the 10-, 5- and 3-day MAs, which could be signaling a short-term bear market recovery. the forecast of ethereum price da showed the coin could drop 3,84% to $1.112,63 by June 29 and to $736,85 within a month.
Some analysts were more optimistic in their prediction of ethereum price for 2022, expecting ETH to bounce back above the $2.000 mark to $2.196,38. The price could reach $3.819,22 by the end of 2023 and $7.084,03 by the end of 2025 based on the forecast. The price prediction anticipated that the coin would move to $2.184,026 by the end of 2022, $4.762,904 by the end of 2023 and $11.353,14 by the end of 2025.
The ethereum price forecast of the most conservative analysts for 2025 was lower. They projected that the price could average $2.221,68, up from $1.687 in 2023 and $1.509,71 in 2022. For the long-term cryptocurrency price prediction of Ethereum, they projected the price could reach an average of $5.175,26 in 2030, based on historical data.
When looking for Ethereum price predictions, it’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even more difficult to provide long-term estimates. As such, analysts and algorithm-based forecasters can get their predictions wrong. Having said that, before making any investments, do your research, investing in cryptocurrencies is highly risky and speculative, and this article is not a writer's recommendation for investing in cryptocurrencies.
Where to buy ETH token?
ETH cryptocurrency can be traded on the following exchanges:
- Binance
- OK
- bitcoke
- bybit
Conclusion
In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your personal investment portfolio. Whether the ETH token is a suitable investment for you will depend on your risk tolerance and how much you intend to invest. Keep in mind that past performance is no guarantee of future returns. And never invest money you can't afford to lose.
Frequently asked questions
Will the price of Ethereum go up?
Algorithm-based cryptocurrency prediction sites have predicted that the price of ETH will increase in the future from June 24th, although they have offered very different predictions for the level the price will reach. Whether the price of ETH will rise or fall will depend on sentiment in the broader cryptocurrency markets, as well as continued adoption of the Ethereum blockchain.
Should I invest in Ethereum?
Whether you should invest in the ethereum token is a personal decision that will depend on your financial circumstances, risk tolerance and portfolio composition.
