What is Ethereum?
Ethereum is a decentralized platform for constructing applications and organizations, keeping assets, trading, and communicating. To use Ethereum, it is not necessary to provide all of your personal information; you retain control over your data and what is shared. Ether, Ethereum’s native coin, is used to pay for some Ethereum network transactions.
What is the Ethereum merge?
The Merge signifies the union of the existing execution layer of Ethereum (the mainnet we use today) with the Beacon Chain, its new proof-of-stake consensus layer. It eliminates the need for energy-intensive mining and uses staked ETH to safeguard the network. This is a tremendously exciting step towards accomplishing the Ethereum goal with increased scalability, security, and longevity.
It is vital to recall that Beacon Chain* was first distributed separately from Mainnet. Even as the Beacon Chain operates in parallel using proof-of-stake*, the Ethereum Mainnet, including all of its accounts, balances, smart contracts, and blockchain data, remains protected by proof-of-work*. Proof-of-work will be permanently replaced by proof-of-stake at the next merge, at which point these two systems will be unified.
Let’s explore a comparison. Consider Ethereum to be a spaceship that is not yet prepared for interplanetary travel. With the aid of the Beacon Chain, the community has constructed a new engine and a reinforced hull. After extensive testing, it will soon be ready to replace the old engine with the new one mid-flight. This will integrate the new, more efficient engine into the existing spacecraft, which will then be prepared to conquer the cosmos.
*Beacon Chain: The Beacon Chain is an accounting ledger that manages and organizes the network of stakeholders. It is not quite comparable to the Ethereum mainnet of today. It does not execute transactions or manage interactions between smart contracts. It is a new consensus engine (or “consensus layer”) that will shortly replace proof-of-work mining, bringing with it a number of substantial enhancements.
The Beacon Chain’s function will evolve over time, but it is a core element of the safe, eco-friendly, and scalable Ethereum that we’re pursuing.
*Proof-of-work: Proof of work (PoW) is a type of cryptographic proof in which one party (the prover) demonstrates to other parties (the verifiers) that a certain amount of computing effort has been invested. The subsequent confirmation of this expenditure requires minimum work from the verifiers.
*Proof-of-stake: Coin holders in a cryptocurrency network can act as validators by staking their coins under the proof-of-stake paradigm. Staking is the act of pledging cryptocurrency for use in the confirmation of other users’ transactions. While your coins are locked away while they are being staked, they can be unstaked and traded.
What do you need to do to get prepared for the Merge?
Although the effects of The Merge, one of Ethereum’s most major and anticipated improvements, will be felt by everybody in the long run, in the short run, certain people will need to take action to be completely prepared.
Participants and owners
When accessing The Merge, you do not need to take any special precautions to safeguard your money.
To reiterate, there is nothing you, as a user or holder of ETH or any other digital asset on Ethereum, or as a stakeholder who does not run a node, need to do with your assets or wallet in advance of The Merge.
Even though proof-of-work was swapped out for proof-of-stake, nothing in Ethereum’s history from its inception was lost in the process. After the merge, you can continue to use the same wallet you used previously. There is nothing you need to do to activate the update.
Scammers may try to take advantage of you as the merge of the Ethereum mainnet approaches, so be on the lookout. In an effort to “upgrade to ETH2,” sending your ETH anywhere is futile. There is no such thing as an “ETH2” token, and no additional action is required to keep your money secure.
When is the Merge due?
The Merge is anticipated to launch in Q3/Q4 of 2022. The client developers are presently working towards a soft target of September 19th, 2022, but this might be altered based on the success of the last testnet merging (Goerli) in mid-August, continuous client enhancements, and the hashrate of the existing miners being stable. Everyone is working diligently to expeditiously deliver The Merge.
Ethereum’s proof-of-work system will be retired at this time, ushering in a new age of reduced resource use and carbon emissions. Find out how much power Ethereum uses.
As a result, Ethereum will be one step closer to reaching the full size, security, and sustainability envisioned in the Ethereum vision, which was not achievable under proof-of-work.
What can happen to Eth price after the merge?
The Ethereum price has been on the rise since the Ethereum Merge was announced in the middle of September, with the token’s value increasing by more than 50 percent in just 7 days. As the merge approached, demand surged, sending the price from $1090 to a local high of $1641.
Another topic that has garnered interest in the cryptocurrency space is Ethereum’s potential deflation following the merge.
According to market statistics, a drop in the net issuance of ETH would lead to a rise in the price of ETH since there would be a lower amount of ETH in circulation.
Burn rates have skyrocketed during periods of peak network traffic, putting stress on the industry as a whole. This led to a rise in costs. As the market anticipates changes in the circulating supply, the price of Ethereum (ETH) should drop prior to the Merge. Additionally, early September saw a rise in the number of investors wanting to unload Ethereum.
At the Ethereum Community Conference in Paris, Vitalik Buterin, one of Ethereum’s co-founders, stated that the Ethereum Merge is merely a piece of the expansion strategy. The Ethereum roadmap includes the Surge, Verge, Purge, and Splurge phases. The team will keep plugging away at it to improve its scalability, efficiency, speed, and security.
Buy the rumor sell the news explained.
There is an old saying in the trading world that goes something like, “Buy the rumor, sell the news,” which suggests that if positive news is predicted at some point in the future, the price will likely increase higher in anticipation of that date, but not necessarily after.
Prices on the market can fluctuate in response to rumors of impending events. Most people who are interested in buying the stock or currency will have done so by the time the event occurs. Because of this, once the event takes place, there will be no buyers to maintain the current price level. Because of this, many individuals are selling in an effort to realize a profit.
Similar to how investors will remark “the information was already baked in” if favorable news causes an asset price to decline after it is released. Their point is that the asset’s price has already factored in the positive effects of the news, given the increase in value that was curred prior to the announcement.
In the days and weeks preceding an event that is expected to be positive for the security in question, buyers tend to be more active. In the case of a stock, the event may be the release of earnings data or the implementation of a stock split. A rise in interest rates might have this effect on a currency.