Ethereum “merger” was the second key event of 2022 in the cryptocurrency market
The most significant event in the cryptocurrency market this year was the market crash in May. At the same time, the so-called “merger” of Ethereum became the second most important. Thus, the largest Merge update was released, which transferred ETH to an environmentally friendly Proof-of-Stake model (previously, the Proof-of-Work model was used).
According to Axios, in addition to the expected positive consequences for the climate (reducing the impact on the environment), this “merger” showed that a giant, dispersed community without clear leaders can come to a consensus and implement a complex reorganization of a huge decentralized network.
The new model should prove that a decentralized and public network can operate in the most energy efficient way. Indeed, thanks to the “merger” much less electricity will be consumed, and this is good.
The Axios article notes that the issue has been discussed for a very long time. Initially, it was assumed that the transition could happen “soon” when Ethereum was still three years old, namely in 2018. But while Ethereum was being tested and changes were being discussed, many other crypto networks went ahead and launched Proof-of-Stake from the very beginning. Through these test crypto networks, Ethereum could observe and learn.
At the same time, starting to “merge” was not as easy as writing and testing the code. Updates were required. Many decentralized node operators actually had to update their code.
It is worth noting that, despite the long-awaited “merger”, this event still divided the cryptocurrency community. Due to the unwillingness of some miners to switch to a new algorithm, the Ethereum chain will be divided into two: ETHPoS and ETHPoW. The first will continue to exist as the main one, and the second will continue to use mining.
Markets all crashed the other day, writes Axios, and the value of ether rose against bitcoin (although ether also plummeted), suggesting that the market knows something special is happening with Ethereum.
Now is a good time to think about how funny history works. In 20 years, if crypto really does to financial markets what the Internet did to publishing, this year’s market crash may be forgotten, and 2022 will likely just be remembered as the year of the merger.
But for now, the start of a bear market is still the big news this year.