We’re nearly a week into September and the Ethereum upgrade is upon us!
So, what’s happening? When is the upgrade to Ethereum happening? Will the upgrade affect the price of ETH?
This article will explain what Ethereum is, how this upgrade works, why it's important to know about the upgrade and how the price of ETH could be affected.
Let’s take a look…
Ethereum has been around for nearly 10 years! The idea for Ethereum was born in 2013, and 2 years later it came to market. Over the years ETH has ruled the roost in the top ranks of the cryptocurrency market holding strong second to Bitcoin. (How long before it could become number one?)
Ethereum is a cryptocurrency that was developed to be more scalable and decentralised than Bitcoin. The most recent update, called Ethereum 2.0, or ETH2, will increase the blockchain's speed and security, but it will be doing so much more too!
The world of cryptocurrency has been highly criticised for its impact on global warming due to the energy consumption of mining and trading. However, this new ETH2 will aim to create a more sustainable future for Ethereum. This upgrade will also make Ethereum more scalable, and importantly to many crypto holders, more secure.
Each of these improvements (security, scalability, and sustainability) are individual upgrades within the Ethereum 2.0 project. However, they are all being worked on simultaneously to make one large-scale, impactful improvement to this cryptocurrency.
The main upgrade point is that Ethereum is switching from proof of work, to proof of stake
Proof of Work vs Proof of Stake
Proof of work and proof of stake are the 2 types of consensus procedures that cryptos use to approve new transactions, add them to the blockchain, and generate new tokens.
Proof of work requires a large amount of power to process, it is currently used by Bitcoin and the current Ethereum 1.0. The reason this is an energy-sapping process is because proof of work blockchains are secured and verified by virtual miners, anyone can give it a go but it does require a computer with above-average performance specifications. They race to solve equations and puzzles, and the amount of energy this uses is probably difficult to accurately quantify as anyone could be doing it, anywhere in the world, for any amount of time.
This is why Ethereum needs to evolve and adapt to decrease its global warming footprint by switching to proof of stake. But the main reason it is switching to the ETH2 upgrade is because the popularity of Ethereum has outgrown the old virtual mining method, the blockchain literally cannot keep up with the transaction demands of Ethereum traders.
Upgrading the crypto to a proof of stake procedure will improve the current limitations of 15-45 transactions per second. The proof of stake network operates with a much lower level of resource and energy consumption.
Why is Ethereum upgrading now? What does the future look like for ETH?
In short, Ethereum is progressing in order to future-proof. It is preparing for a mass increase in adoption and transactions by increasing its scalability through this upgrade.
This won’t be the last of the upgrades to Ethereum though! There is more planned for the coming years in order to keep ETH safe and adapted to future demands and expectations. The next steps for Ethereum are The Surge, The Verge, The Purge, and The Splurge. What these could be is largely unknown, but it is speculated that these will aim to reduce network fees, and further improve the security, sustainability, and scalability of ETH.
How is the ETH 2.0 merger upgrade affecting the price of Ethereum?
It is difficult to predict what will happen to the market value of ETH following the completion of the merger. However, looking across a breadth of cryptocurrency exchanges, it is clear to see that so far over the last 7 days the community has been fully supportive of the upgrade and the value of Ethereum has risen by 9%.
Everyone in the community has been talking about this upgrade and is keen to see what happens once it is completed and then more so for future upgrades still to come!
You can stay up to date with the latest Ethereum upgrade announcements through the official Ethereum website.