The Ethereum Merge is the joining of Ethereum’s proof-of-stake (PoS) Beacon Chain with the Ethereum Mainnet. In simple terms, it’s the transition of Ethereum from a proof of work to a proof of stake consensus algorithm.
This has been a much-anticipated event, as the merge will bring about more scalability and sustainability to the Ethereum network. However, there have been some misconceptions about the event itself. In this guide, we will take a look at five of the most common Ethereum Merge myths and dispel them once and for all.
Ethereum’s Price Long Term
Ethereum’s price has had a fair share of ups and downs over the years. The crypto bear market of 2022 hit the project hard, and it has since remained in a steady downtrend, even after the merge. This is mostly because the event was only the beginning of a series of planned upgrades that will take place over the next few years.
These upgrades will bring about a number of changes to the network, including increased scalability through sharding and improved sustainability through lower fees, eco-friendliness, and faster transactions. Once these upgrades are complete, it is expected that the price of Ethereum will begin to rise again. In the long term, Ethereum is still a very strong project with significant potential and solid use cases. The merge is just the beginning of a new chapter for the project, and most analysts believe it will survive the current bear market.
In terms of investing in the project, there are a few ways to buy and trade Ethereum, and they didn’t change after the merge. You can still use the same tools to buy and trade ETH such as Coinbase, Binance, exchange bots like KuCoin bot or fully automated tools like Bitcoin Revolution. As for the payment methods, you can still use debit / credit cards, paypal, and others, but you can expect lower fees in the future due to reduced congestion on the network.
Impact on Gas Fees
The merge itself wasn’t aimed at immediately reducing transaction fees on the Ethereum network. However, there are a number of planned upgrades that will address this issue in the future. Specifically, the implementation of sharding is expected to increase scalability, reduce fees and also reduce its emissions by 99%. In the meantime, however, a recent report shows that the cost to transact on the Ethereum network is cheaper post-merge. The gas fees remain relatively high on the Ethereum network but lower than it was before the merge.
Unfortunately, the merge did not have a significant impact on transaction speed on the Ethereum network. Before the merge, the Ethereum blockchain released one new block every 13 or 14 seconds. This metric is known as the block time. However, after the merge, the block time is still within the range of 12-14 seconds. There hasn’t been a significant change in the transaction speed of the Ethereum network.
Long term, however, Ethereum rollups are expected to improve transaction speed by up to 1000 times. Rollups are a type of second-layer solution that compresses multiple transactions into one and then sends it to the main Ethereum blockchain. This will reduce congestion on the network and help improve transaction speed.
ETH tokens withdrawal
Ethereum staking has been disabled on most platforms until Ethereum’s migration to proof of stake is complete. According to Bitstamp, ‘users will not be able to withdraw, trade or stake the rewards you earn with staked ETH until the Ethereum 2.0 upgrade is completed, which is expected to happen sometime by early 2023’.
Coinbase also stated that ‘staked ETH (ETH2) balances won’t be unlocked at the time of the Merge or be available to trade or transfer until the Ethereum protocol upgrade completes. The upgrade is anticipated to be completed by early 2023′.
There are technical reasons why staked Ethereum can’t be withdrawn from most platforms. However, those who have their Ethereum in hot wallets can still transact and trade as normal.
Environmental impact and energy consumption
Eco-friendliness is by far the most important change that will come as a result of the Ethereum merge. Before the merge, the Ethereum network was not sustainable because it consumed too much energy. This was due to the proof-of-work consensus algorithm that the network used. It required miners to use large amounts of energy to power their computers in order to validate transactions.
Now, however, the Ethereum network has switched to a proof-of-stake consensus algorithm. This means that instead of miners, there are now validators. These validators stake their ETH in order to validate transactions on the network. This doesn’t require miners to solve complex mathematical problems, and it doesn’t consume nearly as much energy as proof-of-work. Estimates suggest that proof-of-stake will use 99% less energy than proof-of-work.
This is a huge win for sustainability, but the impacts will only be felt long term. This is because many miners still have their mining equipment and aim to keep mining an Ethereum fork known as Ethereum proof of work (ETHW). However, the mining process hasn’t been as lucrative as it used to be. This could discourage mining activity over time and lead to a more sustainable Ethereum network.
Finally, making cryptocurrencies eco-friendly is a team sport. This means other blockchains like bitcoin have to improve the environmental friendliness of their networks. Otherwise, cryptocurrencies will continue to be seen as detrimental to the environment.
The Ethereum merge aimed to make Ethereum more sustainable, efficient, and eco-friendly. However, there are still some challenges that need to be addressed. For example, transaction speed on the network is still an issue. Additionally, staking rewards can’t be withdrawn from most platforms until the Ethereum 2.0 upgrade is complete. Nevertheless, the merge is a positive step in the right direction, and it’s good to see the Ethereum community working together to make progress.