Ether Edges Lower Following Successful Blockchain Upgrade Called ‘The Merge’
Ether tokens edged lower Thursday following an historic ‘merge’ of two blockchain networks, one of which underpins the world’s second-largest cryptocurrency, that creates what could be a significant challenge to bitcoin’s dominance in the digital token market.
The Ethereum blockchain, upon which the Ether token is built, completed a highly-technical overlap with a newly-developed system that will dramatically reduce the amount of energy required to both validate individual transactions and create new tokens.
By removing “proof of work” to validate transactions (which requires massive amounts of electricity to power the computers) with “proof of stake” (a method where validators can put up their own either tokens as collateral to perform essentially the same task) the new Ethereum 2.0 blockchain should become both more efficient and environmentally-sustainable at the same time.
“The Merge is a substantial technological feat when considering that Ethereum is the second largest blockchain today,” said JMP Securities analyst Devin Ryan, who estimates its market value at around $200 billion. “It will not directly impact network speeds, fees, or scalability, but it is a necessary step to move on to a series of additional planned upgrades in the coming years should give Ethereum more capacity to store and access data and therefore more directly reduce network congestion and transaction fees.”
“Simply put, a house that is going to last generations can’t be built on a shaky foundation and we believe that the Merge puts Ethereum’s foundation on a strong path to remain in, and actually accelerate, its position as a leading base layer blockchain,” he added.
The merge itself, while many years in the making thanks to the work of dedicated crypto developers, was completed — and steamed live on YouTube — in about 12 minutes.
Ether tokens, which comprise around a fifth of all cryptocurrency trading, were last seen 0.2% higher on the session and changing hands at $1,600.30 each. Bitcoin prices, meanwhile, edged 0.8% lower to $20,064.70 each.