Ethereum has topped the scene in the cryptocurrency market in recent days, after implementing the largest ever network upgrade, called consolidation, in a move that is a game changer for the entire crypto market, and a new phase for Ethereum in particular, and this process unexpectedly did not come It has paid off so far, and the second largest cryptocurrency after Bitcoin has suffered huge losses, but Ethereum still promises its investors to reap solid profits in the long run.
The upgrade of the Ethereum network went into effect on September 15, which has been in preparation for 6 years in a move aimed at improving network performance and reducing energy consumption, which has long been the subject of criticism of cryptocurrencies due to the mining process, which involves many energy-intensive mathematical equations. At a time when the world aims to reduce carbon emissions and achieve a green transition, this new upgrade could have significant impacts on the carbon footprint of the entire cryptocurrency.
At the outset, we will learn about the nature of the merger and its impact on the performance of Ethereum so far, before we address the history of upgrades to the Ethereum network, and what awaits the currency in the future?
The merger process and its consequences
The merger transforms the Ethereum blockchain from a Proof of Work to Proof of Stake system, in a move that reduces the energy consumption of the Ethereum network by up to 99.9%, as the electricity consumption of Ethereum is currently approximately 78.6 TWh per year, which is equivalent to the consumption of countries around the world.
But.. how is that? Proof of Work and Proof of Stake are both consensus mechanisms that aim to secure the blockchain, prevent fraud, and authenticate transactions. Under the Proof of Work mechanism, miners verify new transactions on the blockchain by solving complex mathematical equations, and this requires power-intensive consumption, which has made the cryptocurrency industry vulnerable to criticism. .
As for Proof of Stake, transactions are validated by validators or coin owners, rather than miners, who lock their tokens, reducing computational efforts, thus lowering power consumption, as Ethereum founder Vitalik Buterin explained that the merger The latter will reduce global electricity consumption by 0.2%, especially as it will reduce the daily supply of new Ethereum units by 90%, after 13,000 new units were mined daily.
And if this move will silence critics about the carbon footprint of Ethereum and others, it is also important for investors because it will make post-merger Ethereum more like a traditional financial asset that carries a return, such as bonds, which could tempt hedge funds, asset managers and other investors, who are shying away About investing in cryptocurrencies so far, but this advantage is not yet clear, as Ethereum suffered heavy losses after the upgrade process.
The merger also opens up new ways to boost returns for cryptocurrency owners via proof of stake, but at least 32 Ethereum must be owned in order for the investor to be responsible for processing transactions and earning a return in return.
Ethereum investors are obligated to freeze their holdings of the coin, to win the right to create a block in the blockchain, and based on the stake, one of them is chosen to be the validator, and once the participant verifies the validity of the block of transactions, the network adds a new block, and the rewards are distributed according to each validator’s share, but so far There are criticisms that Ethereum is already working on proving the stake, but it does not give returns on it currently, and this can be due to the fact that the upgrade is still nascent and somewhat ambiguous, which sparked the ire of critics and may actually be one of the reasons for the current declines
Since the merger process so far, Ethereum has fallen by about 20%, falling from levels of $ 1,600 on September 14 - before the upgrade was implemented - to less than $ 1,300 on September 19, bringing its losses since the beginning of this year to more than 65%.
* Ethereum performance since early 2022
The contagion of losses affected the entire cryptocurrency market, which lost more than 700 billion dollars of its market value during the past six months to fall below 900 billion dollars, especially with the decline of Bitcoin below 19 thousand dollars, but we should not lose sight of the role of concerns about further operations US interest rates hiked on losses in cryptocurrencies and other risky assets, with the Federal Reserve meeting this week ahead.
Upgrade history
The idea of creating Ethereum began in 2013, at the hands of the Russian Vitalik Buterin, before he obtained funding for the project, along with other founders, amounting to $18.3 million in bitcoin in the summer of 2014, and the initial coin offering price was $0.311, according to data available on Ethereum. Queen Market Cap website.
Officially, Ethereum came to light in July of 2015, and has become using the blockchain as a global platform for decentralized applications, and it has become a platform for many other cryptocurrencies other than Ethereum, especially since the Ethereum blockchain network was credited with creating ERC-20, a technical standard that makes the network capable on hosting non-fungible tokens (NFTs) or cryptocurrencies.
Since then, the second largest cryptocurrency in the world has seen several network updates starting from February and then December of 2019, passing through a new upgrade in January 2020, then in 2021, Ethereum has seen two network updates, and most recently the merger, which is the largest and most ambitious upgrade.
Of course, these developments played an important role in the price movements of Ethereum, which crossed the one-dollar threshold for the first time in August 2015, and the currency continued to grow until its price rose above a thousand dollars in 2018, and then took a downward trajectory in the following two years with strong losses in the cryptocurrency market .
The year 2021 witnessed a great boom for Ethereum, as it exceeded the level of $ 2,000, then $ 3,000, and then jumped to an all-time high of $ 4,800,000 last November, before returning to decline again to reach currently at $ 1,300, but there is a state of optimism about the future of Ethereum. Ethereum, especially after the merger.
* Ethereum movements since its launch in 2015
Why is Ethereum the currency of the future?
Little by little, Ethereum has begun to narrow the gap between it and Bitcoin, the largest cryptocurrency by market capitalization, making Ethereum bulls more optimistic about its potential to become the top crypto market in the future, with the goal of being more than just a means of exchanging and storing value, Ethereum enthusiasts are betting. However, it will be more sustainable compared to Bitcoin, whose carbon-neutral policies may reduce its long-term attractiveness, as it is an energy-intensive consumer.
Beyond the carbon footprint, optimism surrounds the future of Ethereum, because it is used in purchases related to non-fungible tokens known as NFTs, which have been very popular in the past period, a type of crypto asset, based on the blockchain, that allows one to own a digital asset such as an art image. Or video and other assets that can be purchased.
The most prominent example of these tokens was the sale of Twitter founder Jack Dorsey of his first tweet on the social networking site, which was published in 2006, as a non-fungible token, for 1630.58 Ethereum, or approximately $3 million depending on the price of the coin at the time. Selling in March 2021.
Ethereum is also receiving support with its use mainly in decentralized finance or DeFi, which is a type of blockchain-based financing that does not depend on central financial intermediaries, as happens in banking, so it is expected that it will see a wide spread in banks in the long term, which supports Ethereum.
In addition to the previous positive factors, Ethereum is in the process of a significant Shanghai upgrade early next year that will have more impact on the cryptocurrency's movements, compared to the merger, which is a major technical change.
The network upgrade scheduled for 2023 is called hashing, because it will see the main Ethereum blockchain split into several smaller networks, and thus, the cryptocurrency will be able to handle thousands of transactions per second.
As for the technical analysis of the movement
It seems to us that the bottom of June 18, which was achieved at $880, is a technically solid bottom and will most likely end the price correction that started from the top of 4800 in November 2021. This technical vision supports us in what actually happened in the recent rebound to rise to $ 2030 on last August 14, which we believe It came in the form of a diagonal frontal wave, LD, to indicate the formation of a bottom
Currently, the price of Ethereum is at $1350, and as in the above chart, it shows us the formation of a triple correction from the top of 2030 dollars, and we are currently in the last stage of it, meaning that the bottom may form at any time in the current price atmosphere with the possibility of it extending to 1200 dollars.
What matters to us is that we are in the atmosphere of price bottoms and after this bottom is formed, which in my opinion will be the last chance in my opinion to catch the train, prices will quickly move to stabilize above the $2000 level, targeting at the beginning of 2023 the levels of $4300 and $6200 as natural technical targets, God willing. and good luck
I will not be surprised, my friends, if we see price explosions at the end of 2023 that push the market value of Ethereum to rise from 165 billion currently to officially enter the trillion dollar club, but more than that, I believe that Ethereum has all the capabilities to receive the market leadership from Bitcoin on the next upward journey
For all of the above-reviewed basic and technical information, and in light of all these positive and continuous developments of Ethereum among the attractions and the flexibility of the continuous development of the emerging industry, it is natural for many cryptocurrency investors to view Ethereum as the currency of the next beautiful future, so I mentioned on more than one occasion that I believe that Ethereum in 2023 and 2024 will be the golden horse of the wild winner
And for those who want to start investing in digital currencies and have questions about the best methods and central platforms that provide protection with ease of trading with withdrawals and deposits, you can always contact me on my direct Twitter account @TrendXP
My best wishes for success to all investors, and may God bless you with His goodness
Iyad Aref
Founder of the economic site Namazone
