The expected change in Ethereum that threatens to impact Bitcoin and the entire cryptocurrency ecosystem

After years and years of delays, what was known as Ethereum 2.0 and the step of using proof-of-work a proof-of-stake beacon chain and that it will surely have ramifications in the rest of the crypto world, Bitcoin included.

The update of Ethereum as a blockchain is going to radically change the way it works. With that new Ethereum merge is intended to strengthen the network and make it faster and more scalable.

This change will also achieve be 99% more energy efficient which will also affect the price of transactions made on this blockchain.

It is an issue that we have dealt with before and that, in fact, is expected to be the step that raise the future of cryptocurrencies.

The first change we will see with this merge is that proof-of-work mining will endthat is, any user with their GPU will allow you to mine individually or as a group to use the proof-of-stake blockchain mode, also known as beacon chain.

The Bitcoin network will continue to use proof-of-work and is one of the most consuming at the moment, with a daily consumption of between 11-15 GW per day. According to Casablanca, in terms of energy consumption, Bitcoin is responsible for between 60-77% of the total consumption required by the entire crypto market.

Bitcoin users comment that this new proof-of-stake mode, which requires having identified and registered nodes with a significant amount of cryptocurrencies in their possession, sacrifices network security. Also ethereum miners they will not be able to continue mining coins, which means machines and rigs that will no longer be useful and have cost thousands of euros. It is perhaps the moment of migration to Bitcoin.

On the other hand we have the implications on other cryptocurrencies beyond the two great kings.

There are two possibilities, the change of Ethereum could lead to a benefit for other cryptocurrencies that already used this proof-of-stake system because one of the big ones happens to use their same validation system.

Difference between proof of work (PoW) and proof of stake (PoS)

The main difference between PoW and PoS is the way they determine who can validate a block of transactions.

Proof of Stake is the most popular alternative to Proof of Work. It is a consensus mechanism that aims to improve some of the limitations of PoW, such as scalability and power consumption issues.

In PoS, the participants are called validators. They do not need to use powerful hardware to compete for the opportunity to validate a block. Instead, they need to stake (lock) the native cryptocurrency of the blockchain. That is, contribute an amount of money (cryptocurrencies) in the form of a fixed deposit to be able to be validators.

The network selects a winner based on the amount of crypto staked, who will be rewarded with a proportion of the transaction fees from the block they validate. The more coins you have in stake, the higher the probability of being chosen as a validator.

Having seen the differences, we also want to put on record that the market’s reaction could be just the opposite due to this. That users of these networks, cheaper than ethereum, switch to it since there is no such difference in value already in the proposal of smaller crypto networks.

This change from Ethereum will separate the network from Bitcoin in conversations about cryptocurrencies and energy consumption.

Although Ethereum Merge will happen this week and we have been commenting for years that it will occur, it is difficult for the market to quickly adapt to it.

Many experts comment that the systems are ready for the change, but yes, the direction that the rest of the crypto market takes will depend on the success of the merge.