Ether is outperforming its more well-known rival Bitcoin once again, as anticipation grows for a long-awaited update that promises to lessen the carbon footprint of the world’s most widely used blockchain.
In the last seven days, Ether, the Ethereum blockchain’s native cryptocurrency, has gained more than 16 percent, while Bitcoin has gained 8.4 percent. Ether has lost nearly 17% of its value this year, while Bitcoin has lost about 7%.
The newest round of outperformance comes as the community prepares for Ethereum’s biggest software upgrade in its eight-year history. The Merge, which is scheduled to happen within months, will modify how Ethereum transactions are sorted, allowing the network to use less electricity and run more effectively. For years, developers have promised an overhaul. The last test of this program before the Merge began on March 15, and it appears to be functioning smoothly despite some initial issues such as error warnings.
“The ETH merge on the ‘Kiln testnet’ caused ETH to outperform the market,” said Teong Hng, a co-founder and the chief executive officer of Hong Kong-based Satori Research. “It is regarded as an upgrade in terms of the transactions’ validations in Ethereum. The merge was successful with no major issue reported.”
Ether surged 4.8 percent in Asia on Tuesday (March 22), reaching its highest level since February 17 and trading at US$3,043 (about RM12,825) at 12.38pm in Hong Kong. Bitcoin rose as well, rising 4.9 percent to US$43,144.
The new program will not only make Ethereum more appealing to environmentally conscientious investors, but it will also likely reduce the amount of Ether in circulation.
Following the merger, Ethereum’s network will no longer rely on millions of strong servers known as miners to organize blockchain transactions. People will instead be able to deposit their Ethers into special staking wallets that will be used to order transactions – a technique known as “Proof of Stake.” Stakeholders won’t be able to withdraw their money for at least six months following the Merge, when another software upgrade is scheduled.
They’ll also be less inclined than miners to sell newly produced coins they get as staker rewards because they don’t have the same high operational costs as energy-hungry miners, according to Kyle Samani, a co-founder of Multicoin Capital. Ethereum’s energy consumption should shrink by 99 percent after the Merge.
The Merge was supposed to happen months ago, but it was postponed while Ethereum engineers worked to ensure that everything went well. It is the foundation of the Ethereum economy, which includes $349 million in Ether, as well as billions in decentralized finance apps and non-fungible tokens. The Merge was supposed to happen in the second quarter of 2022, but the Ethereum Foundation recently stated in a blog that the exact timing hadn’t been finalized, possibly indicating a minor delay.
“It would take a catastrophic event for it to not happen this year,” Tim Beiko, a computer scientist who coordinates Ethereum developers, said in a statement. Still, some miners expect the Merge will get pushed out into the fall.