The recent Ethereum merge, a process whose result was the complete switchover of the ETH coin to a proof-of-stake (POS) instead of a proof-of-work environment, had several key impacts on various areas of the cryptocurrency market, opened up several new trading opportunities, played a role in altering the price, and much more. What are the short and long-term implications of the merge, and what are some of the most unexpected results from the merge?
In order to get a handle on what the new ethereum coin is all about, it’s important to know that the entire blockchain has been upgraded. In essence, the version of ETH that existed before September 15, 2022, is no longer the one being actively used and traded by many. What has the upgrade done to the crypto niche in general, and what can trading enthusiasts expect to happen to the price of bitcoin (BTC), ETH’s biggest rival? The following points highlight several of the most relevant ways in which the merge has unexpectedly affected other crypto, markets, and the financial sector as a whole.
The Entire Crypto Niche
For starters, ETH’s merging action had little immediate impact on much of anything in terms of markets, other crypto, investor interest, etc. However, the move could be a major boost for proof-of-stake as a concept and goal for other competitors in the segment. In a way, the whole arena was altered by the recent changes at ethereum. Not only was the transformation successful, in terms of going through without a technical glitch, but it also shows that the world’s second-biggest crypto can transfer to a protocol that uses less energy for mining and creating new value.
The Price of Bitcoin
It’s been a tough year for all the cryptocurrencies, particularly for BTC and ETH. For its part, bitcoin began 2022 at the $47,000 level and proceeded to drop to its current $19,042 point. Did all the activity over at rival ethereum have any effect on bitcoin’s price? In the short term, it probably did not. But the real question is how the long-term effects might pan out. If the market views the switch to POS as a positive thing, then BTC could stand to lose a bit of luster in the eyes of potential buyers and holders. That’s mainly because BTC is one of the old-guard POW coins. Note that POW uses a much greater amount of energy to mine new coins than does the POS method. Anyone who does bitcoin trading via CFDs should watch for continued weakness in the world’s first and still biggest form of virtual money.
For traders, the fresh scenario at the world’s second most capitalized crypto means new opportunities. Not only does it make sense to watch for others to adopt the POS system, but speculators can observe the potential long-term effects on ether, which could prove to be significantly positive. Of course, the generalist approach would be to compare POS to POW cryptos and compare relative price changes. If the merging action by ethereum in September has a long-term fallout, it might serve to support staked coin issues and suppress the prices of work-based issues.
The Price of ETH
ETH’s price after September 15 did not surge or drop significantly, even amid all the heavy coverage in financial media. In the immediate aftermath of the switch, the per-coin price moved downward over a nine-day period, from $1,504 to $1,342. It’s impossible to say whether any of that downturn is attributable to the merging action because the entire cryptocurrency sector had a bad second half of the month.
Amateur Mining Operations
It might take a while, but the amateur mining business could be coming to an end as a direct response to the newest developments in the niche, particularly those that are merge-related. Why? As markets slowly move toward a POS model, home-based miners, like those who earned serious money in the early days of the bitcoin craze, are going the way of drive-in theaters and typewriters. It’s just not going to be profitable for any individual to mine cryptos on a small scale anymore.
However, what’s often overlooked when examining the imminent death of amateur mining is the rise of new cottage industries around the virtual money sector. Those include services like analysis, storage, staking, hardware, and more. In fact, the entire currency universe is growing at a rapid rate and transforming the world economy in its wake. For anyone interested in making a living from the dozens of related business opportunities, the 2020s will likely be a highly lucrative decade.