Ethereum: Environmentally friendly update could accelerate Bitcoin Challenge

Ethereum is on the threshold of an update that should silence those who say that blockchain technology and cryptocurrencies are too energy-intensive to play a role in the future of financial system. Known as The Merge, it includes the merger of the main network of Ethereum blockchain with a different system to reduce energy consumption. A successful dress rehearsal in August means that the change could take place in the coming weeks.

like Bitcoin Ethereum uses a proof-of-work model in which complicated equations have to be solved in order to unlock new digital tokens or validate transactions-something that requires a lot of computer performance. The merger means that Ethereum will switch to Proof-of-Stake, in which users verify transactions with their existing assets. This requires less electricity - 99.95 percent less, according to the information page Ethereum.org created by the community. Token owners can invest their capital through staking and borrow digital assets to validate transactions.

On the Proof-of-Stake-Blockchain network Solana, the Cryptoplattform Coinbase estimates that the annual return for staking is around 3.85 percent. Ethereum, a larger network with more transactions, could achieve higher returns. Ethereum.org forecast 7 percent.

Ethereum's digital token ether is the second largest cryptocurrency. However, the distance is considerable. According to Coingecko, the market value of Ether is about half of Bitcoin. Like all cryptocurrencies, the price withdrew from a record high last year, since interest rate increases reduce the demand for risky assets. It has dropped by 60 percent of its maximum, just below the 65 percent decline in Bitcoin. The merger could reduce the gap by driving the price of ether. It rose by more than a tenth after a test network had completed a simulation of the switch planned for the main network.

The update was previously delayed. Even if it occurs, not everyone plans to take it over. Some miners that will pull the shorter smoke plans to operate the old version of Ethereum - something that is known as a fork. But such a step will not find a broad support. Reducing the energy consumption of crypto is a widespread goal.