Ethereum (ETH), the second largest cryptocurrency in the market surpassed the psychological level of $2,000. This is an important moment for ETH investors and followers as the virtual currency is getting closer to the Merge event, where Ethereum will move from a Proof-of-Work (PoW) consensus algorithm to a Proof-of-Stake (PoS) blockchain network.
Ethereum has surged above $2,000 for the first time since May 2022. One of the reasons behind this price increase in recent hours is strictly related to the upcoming transition from a Proof-of-Work consensus algorithm to Proof-of-Stake. According to data shared by CoinGecko, Ethereum has moved higher by 16.4% in the last week alone, almost three times more than Bitcoin (BTC), which registered a 6.3% growth during the same period of time.
This is a very important thing for the Ethereum community as it will allow ETH to become faster, and cheaper, and the network more scalable.
It is worth pointing out that this week, the Goerli testnet transitioned to PoS, one of the main steps before the final Ethereum merge. Developers have been testing for years this implementation and the final steps are closer.
With the expansion of the decentralized finance (DeFi) market and non-fungible tokens (NFTs), we have seen Ethereum becoming more and more congested over time. In recent years, Ethereum transaction fees were higher than on the Bitcoin network. Therefore, it became very difficult for users on top of this blockchain network to interact with smart contracts and other applications.
At the same time, the official launch for the Ethereum Merge has been scheduled between September 15th and 16th. Therefore, the community is now waiting for this important moment and betting on Ethereum moving higher in the near future.
The Ethereum Merge has been scheduled for TTD 58750000000000000000000
This is approximately Sept 15-16th
The Merge is officially scheduled 📆
— bankless.eth (@BanklessHQ) August 11, 2022
It is also worth taking into consideration that analysts believe that there could be some hard forks affecting Ethereum in the future at the moment of the transition. This is because a part of the community might prefer to stay in the old chain (PoW) rather than transition to a PoS blockchain network.
Some cryptocurrency exchanges have already informed that they would support new tokens in case there is a hard fork on the Ethereum network. There could be an ETHS and an ETHW token, each of them representing one of the networks (PoS or PoW, respectively).
Nevertheless, Vitalik Buterin, one of the co-founders of Ethereum said that people that prefer a Proof-of-Work Ethereum can already rely on Ethereum Classic (ETC), which has a larger community and has been running for several years. It is just a matter of time to see how this will unfold in the next few months. The cryptocurrency market has a large experience when it comes to hard forks.
As we can see, there are many doubts about what the new Merge will look like and which will be the consequences of this transition to a Proof-of-Stake blockchain network. The Ethereum community that supports the transition to a PoS consensus algorithm have been against a hard fork and has been commenting negatively about it.