For almost the entirety of the existence of cryptocurrency as a concept, Bitcoin has been the only coin most people have even heard of. Indeed, there are some people who use the terms “Bitcoin” and “cryptocurrency” more or less synonymously. And it has been BTC that has dominated the news pages and the blogs during this time. It would, you’d think, take something pretty dramatic to knock the main crypto coin off the front pages. And that’s what’s happened this past week, as the Ethereum Merge takes place, delivering the ETH crypto to a simpler, more eco-friendly method of mining.
What does this mean for the future of crypto? We know that it will make Ethereum mining less profitable, and leave fewer ETH coins in existence. But what’s going to happen now, and what does it mean for casual investors? Some answers lie below…
Will Ethereum fees reduce now?
Not any time soon, no. Transaction fees will remain unchanged by the Merge, although approaches such as danksharding are considered to be realistic ways of driving those fees down, and these are a realistic possibility in the near future. Not this year, however, so if you want to limit the fees you pay to transact ETH, you’re best off looking into third-party networks which bundle transactions and process them away from the mainnet. Such networks include Arbitrum and Optimism.
What are the benefits of being an ETH miner now?
Well, smaller energy bills, for one. There’s also the fact that staking Ethereum doesn’t mean you can’t still use it. Sites such as cloudbet.com are accepting Staked Ethereum (stETH) as a payment method, so you can continue to mine ETH while still using it as a financial instrument. There’s also always some advantage to being an early adopter. ETH is the first prominent crypto coin to move to Proof of Stake. Some others will follow, but being first in the queue always gets you ahead of the prevailing wind. And while others will remain on the Proof of Work mechanism, that’s going to become ever more inefficient and unprofitable as people explore alternatives that stay on the right side of climate policy.
Will ETH see a price rise as a result?
That’s hard to predict. The Merge is likely to boost ETH’s popularity among at least a chunk of the market. That could have benefits for its price, as it does open the market to some people who would not previously have traded cryptocurrency. The question has to be whether that change is priced in – ie. has it already been factored into the price at which ETH is traded, given that we all knew the Merge was coming? There’s also a question over whether the Merge will go as planned – and even if it does, will it be a victim of FUD from holders of other coins? We might see a price rise, but one which happens down the line after the noise has died down – but at this point, we don’t know what will happen.
