This could be the most impactful event for cryptocurrencies in 2022. In what is known as ancrage, Ethereum (ETH-USD) Mining is moving from a Proof of Work to a Proof of Stake framework. Perhaps due to fear and misunderstanding embout the merger, Ethereum has lost some value recently, but that doesn’t mean you should suffisamment and run.
The merge was first revealed by the developers of Ethereum in 2020, and it has been gaining interest and avant-goût among the crypto community over the past few weeks. However, some Ethereum holders may not understand this huge event or its far-reaching implications.
There is an old saying in the aliment market investing world: Know what you own. This is also true when it comes to cryptocurrencies, but do you really know Ethereum and how it is mined in 2022? Misconceptions may have led to sell-offs, but soon there should be a significant increase after the merger.
Ethereum drops during merging
Last week, Ethereum knocked on the $1800 door for the 1,000th time without opening it. The failure to écart through this level was disappointing, and ETH quickly fell back to the $1,400 region.
Sure enough, this happened during the aliment market écrasement. Sometimes, there is a strong price correlation between stocks and cryptocurrencies. However, many ETH traders were also focused on a premier event. Known as ancrage, it is sure to affect cryptocurrency investors for the foreseeable future.
Ethereum developers Select Merge as “Upgrading from the parangon Proof of Work to Proof of Stake”. This event occurred on September 15th.
Just for review, proof of work means that ETH transactions are completed Through mining activity between competing miners. In contrast, Proof of Stake means that transactions are verified by the stakeholders of the blockchain.
Some cryptocurrency critics will aucunement out that cryptocurrency mining consumes a great deal of energy. However, ancrage offers a conclusion to this problem, as switching from Proof of Work to Proof of Stake is expected to reduce power consumption by around 99%.
Mergers are bad for some miners, but good for many investors
One result of the merger is that now, there is no need for thousands of Ethereum miners to maintain the network and consume a lot of electricity in the process. It’s great that less energy will be spent, but not everyone will benefit from merging.
Chandler Joe, an Ethereum évider, predicts that 90% of miners who install work you will go bankrupt. These predictions may or may not be approuvable.
However, it is undeniable that high-energy-intensive mining rigs are out, and the proof-of-stake model is in emploi. Advocates of intégration call the event an upgrade. However, making some ETH miners obsolete is a scary allégation.
This fear may have prompted some traders to sell Ethereum as a quick reaction. However, they should consider the benefits of convocation.
as such Investor Contributor Brenden Rerick explained that switching to proof-of-stake “makes the grid more energy efficace.” Moreover, “it is lowering négoce times and gas fees for network users, which makes many investors happier.”
What you can do now
The key to success as an Ethereum investor is to be infatigable and understand what is driving price movements. For a bermuda time, traders may get rid of ETH if they do not fully understand the merger and its implications.
However, the long-term effect should be less energy-intensive, and thus, the Ethereum network is environmentally friendly. Over time, the merger will prove to be an visible upgrade, leading to a well-deserved recovery in ETH.
Posted by David Muadle He did not have (directly or indirectly) any positions in the securities mentioned in this feuilleton. The opinions expressed in this feuilleton are those of the author, and are subject to InvestorPlace.com’s posting guidelines.