Bitcoin is the top crypto market, and Ethereum is its biggest competitor. However, there is a trump card of Ethereum that might reverse this positioning in the upcoming time.
This blog will tell everything about it in detail.
The trump card of Ethereum is “The Merge”. Let’s understand it in detail.
The Merge
The Merge is the name given to the most awaited upgrade of Ethereum, which is currently in progress. It represents the merging of the Ethereum mainnet that we use today with its new proof-of-stake consensus layer, called the Beacon chain.
Currently, the beacon chain that runs on proof-of-stake (PoS) works parallel to the Ethereum mainnet that runs on proof-of-work (PoW). A Merge is an event planned to take place by September 19th, 2022, when these two systems finally come together, and proof-of-stake will permanently replace the proof-of-work consensus in Ethereum. It means that Ethereum mining will no longer take place by miners expending energy to mine new ETH. Instead, the miners will become validators, who will stake their ETH into a smart contract on Ethereum to earn new ETH.
In simpler terms, consider Ethereum as a sports car that runs on high-energy-consuming engines. This engine is not just unsustainable but also slows down the performance of Ethereum. To solve these problems, the Ethereum community is developing another engine and testing it on various parameters. Once it passes all the tests successfully, the Ethereum community will replace the old engine with this new engine so that Ethereum can run faster to win the race. Here, the old engine is the Ethereum mainnet running on PoW, and the new engine is the beacon chain that runs on PoS.
How will the Merge affect Ethereum and its price?
Since the Merge will shift Ethereum from PoW to PoS, it will reduce the energy consumption of Ethereum by 99.95%. Once the Ethereum upgrade completes, the network speed will improve from 30 transactions per second (TPS) today to 100,000 TPS.
Moreover, it will also allow the network to shard chains which means the Ethereum network will be able to spread its load across many new chains. It will solve the issues like data congestion that the Ethereum network currently faces. Hence, we will get a sustainable, scalable, better, and eco-friendly version of Ethereum called Ethereum 2.0 in the next few months.
Recently, when the Ethereum network announced a tentative Ethereum merge date in September, the coin started rallying up. Despite the bearish sentiments, it hiked almost 40% after only a few days of this news release. There was a significant rise in ETH from nearly $1000 to crossing $1500, which shows that ETH investors and the community are excited about the Merge upgrade.
According to the experts in Ethereum price prediction, its price can even double or quadruple by the end of this year if this upgrade goes well. An Ethereum price prediction coming from one Bloomberg intelligence analyst states that Ethereum can have its ending this year between $4,000-$4,500. Some other well-established pages have predicted an even higher price range for ETH of up to $8000 for this year. But if the upgrade fails to impress the ETH investors, ETH may have to struggle to retain its $1500 support price.
Will Ethereum surpass Bitcoin price?
Ethereum use cases vary from NFT, DeFi, dApps, etc. It has over 3000 dApps running on it which are increasing every month. When the Merge upgrade launches successfully and Ethereum 2.0 comes into play, the main issues of Ethereum might get solved. Hence, things look pretty good in the Ethereum price prediction for 2022. But whether the upgrade would be enough for ETH to surpass the Bitcoin price is unclear.
Like Ethereum, Bitcoin also owns a trump card called “Bitcoin Halving”. It is a programmed feature in the bitcoin blockchain that occurs every four years when the Bitcoin mining rewards get halved. It means that with time, lesser new bitcoins will come into the market. Since the next halving event of Bitcoin will take place in 2024, it may expect a significant price rally before and after this halving event. Furthermore, unlike Ethereum, which has an unlimited maximum supply, Bitcoin has a limited maximum supply of only 21 Million. Many institutions have accepted Bitcoin, and many others are planning to do so soon. It is not the same case with Ethereum. Lastly, the Bitcoin lightning network is working rapidly towards solving its scalability and other issues. Therefore, Ethereum may not be able to surpass the Bitcoin price.
Considering the market volatility, we advise you to take the suggestions of this blog with a grain of salt.
Conclusion
The Merge upgrade in Ethereum can be the game changer for itself and the crypto market. However, as the Ethereum network has postponed its upgrade multiple times, everything looks very uncertain about it. It might not be possible for Ethereum to surpass Bitcoin in the next few years, but it can happen by the end of this decade. But one thing is sure the upcoming months will be more volatile for Ethereum than Bitcoin due to its technological shift.
