The big moment of the cryptocurrency giant Ethereum (quotation ETH) is upon us. A key part of its update could take place on or around September 15. It is called "the merger". It is intended to solve the main problems of Ethereum: The high energy consumption, network congestion and speed. It will also keep the coin supply low. This supports the idea of a higher price for the cryptocurrency.
Ethereum has been preparing for merger for some time. The developers even delayed it during the testing process. However, it appears that this time the launch is planned. Now the question is: is it worth buying Ethereum before this big event? Let's find out.
Proof of stake transition
First, let's take a closer look at the meaning of the merger. Up until now, Ethereum has used the proof-of-work method to validate transactions on the network. This method involves many computer nodes competing to solve complex mathematical puzzles. The winner adds a new block of data to the blockchain.
This is why Ethereum's energy consumption is so high. Today Ethereum consumes an amount of energy every year equal to that of the Netherlands.
The merger expects Ethereum to switch to another method. It is called proof of stake. In this case, whoever holds the largest share of the cryptocurrency can win the right to validate transactions. As a result, Ethereum will reduce its energy consumption by more than 99%.
Ethereum's first step in this process was the launch of the Beacon chain. This chain uses proof of stake and was able to test the new system. The merger involves integrating this chain into the mainnet. From now on, Ethereum will use proof of stake.
This move won't fix congestion and speed problems right away. But merging is one step closer to getting there. After the launch of sharding, we will be able to count on less congestion, lower fares and greater speed. The launch is scheduled for next year.
Sharding will involve splitting the database to distribute the workload. As a result, Ethereum may be able to handle 100.000 transactions per second. So even after the merger, there is still a lot to do for Ethereum.
A path to a higher value
Finally, the merger will offer an additional benefit. It will reduce the supply of coins. According to IntoTheBlock, the drop in the issuance rate should reduce Ethereum's supply by around 5% per year. A lower supply usually contributes to an increase in the price. So this could be a path to a higher value over time.
This all sounds good. You may be ready to invest in Ethereum right now. But it is important to keep a few points in mind. First, the merger might run into a problem - or the merged Ethereum might run into a problem at some point along the way. Any such event could weigh heavily on Ethereum's price.
It is also possible that all the good news has already been evaluated at this time. Ethereum has gained nearly 50% from its all-time low in July. This means that even if all is well during the merger, Ethereum may not rise significantly.
And, as I always say, cryptocurrencies in general are high risk. This is because it is a new sector and we still don't know for sure what the landscape will be like in a few years, even if things look promising. So don't invest more than you can afford to lose.
Taking all of this into account, however, it seems like it's a good time to get into Ethereum history. As the second largest cryptocurrency in the world, he is already a major player. And he's in the process of solving his biggest problems. Hopefully during the rest of the update, Ethereum could be one of the winning cryptocurrencies of the future.