In today’s bitcoin and cryptocurrency news, read about how Ethereum affects Bitcoin. Meanwhile, there is a possible side benefit to Crypto of Ethereum’s coming big update. On the other hand Bitcoin’s price has dropped below $19,000, marking the first time since June that it has done so.
Ethereum Merger Impact to Bitcoin’s Reputation
Original Source: How Will the Ethereum Merge Affect Bitcoin’s Image?
Vitalik Buterin, founder of Ethereum, said Tuesday the integration will occur “around” September 13-15. The second-largest cryptocurrency will abandon its energy-intensive proof-of-work consensus system.
How will this affect Bitcoin, which still uses proof of work and leads the crypto market?
The merging is the newest Ethereum blockchain upgrade to create a decentralized financial environment. The switch to proof of stake also reduces energy problems.
In proof of stake, validators stake tokens to verify block transactions. The more blockchain tokens a person holds, the more likely they are to be a network validator.
Proof of work requires computers to solve mathematical algorithms to mine tokens. This energy usage is a key critique of proof of work, the basis of Bitcoin mining once Ethereum abandons it.
The crypto business faces many macroeconomic challenges, from political conflicts to high inflation rates to hawkish national monetary policies. These macro reasons sparked the bear market.
In November 2021, Bitcoin reached $69,000. Since then, economic conditions have hurt Bitcoin’s price and the market. The short-term price picture for Bitcoin remains murky as it faces resistance at $20,000. Bitcoin’s return depends on a “economic recovery” or “people embracing crypto for everyday activities,” said to FTX CEO Sam Bankman-Fried on Decrypt’s gm podcast.
As the volatility of prominent cryptocurrencies worries mainstream investors, they may become increasingly critical of Bitcoin’s fundamentals. Ethereum’s network enhancements, aimed to position its ecosystem as the currency of the future, could further challenge Bitcoin’s utility.
Vitalik Buterin highlighted worries about Bitcoin’s proof-of-work issuance scheme in a conversation with Noah Smith last week. “A consensus system that wastes energy is bad for the environment and requires issuing hundreds of thousands of BTC or ETH every year,” he stated.
Buterin worries about how the ongoing issuance of proof-of-work tokens may effect future validation.
Bitcoin’s “issuance will drop to virtually zero,” he added. “But then Bitcoin will face another issue: securing the blockchain.”
Kyle McDonald, a “code artist” who recently predicted Bitcoin’s downfall, tells Decrypt that Ethereum will win the reliability debate and profit from long-term adaption.
After the merge, only 23% of all volume will be proof of work, predominantly Bitcoin, he added. “As authorities search for ways to control crypto, proof of work will be the natural first move.”
Bitcoin’s energy consumption is its Achilles heel.
Digiconomist, a technology publication that tracks Bitcoin energy use, uses economic models involving network hashrate, mining revenue, and yearly energy consumption. That? Bitcoin won’t become viable soon.
China’s crackdown on crypto mining reduced the network’s renewable energy contribution, bolstering the findings. Alex de Vries, a researcher and crypto critic, said Bitcoin became dirtier after China’s 2021 mining crackdown.
But not everyone thinks Ethereum will win.
Analysts like eToro’s Glen Goodman have highlighted how Ethereum’s price has outperformed Bitcoin in recent weeks. “The recent thing has been, ‘Ethereum is more better than Bitcoin because the merge is coming,'” Goodman said on eToro’s “Crypto This Week” webinar.
Looking at Bitcoin and Ethereum together reveals how foolish the combine story is, he said. I’d argue… that was a catch-up game. Ethereum fell significantly harder than Bitcoin at the end of last year and is currently trading where Bitcoin is.
Goodman concluded that the merging narrative “has helped Ethereum recover, but not as much as enthusiasts suggest.”
Dan Held, a prominent Bitcoiner who prefers the term “mostamalist” over “maximalist,” told Decrypt’s gm podcast he’s following the merge closely and that “it will add pressure to Bitcoin’s energy consumption”
“Ethereum is obsoleting itself by deleting Proof-of-Work,” said Satoshi Action Fund founder Dennis Porter. “ETH will flippen itself out of the global energy markets.”
Bitcoin’s future after the combination is unknown due to regulation, energy problems, and competition. Inventors are worried of the possible economic hazards as Bitcoin’s largest competitor gains a technical edge.
Benefits of the Ethereum Upgrade Include Crypto Deflation
Original Source: Ethereum Upgrade’s Perks Include Crypto Deflation
Ether, the second-biggest cryptocurrency, is going toward deflation. Proponents’ bullish case is bolstered.
“Deflation” in crypto doesn’t refer to beef, housing, or fuel prices. It refers to how much a token’s supply grows or shrinks each year. It affects its worth.
Many crypto networks, like Ethereum’s blockchain, release new coins as prizes to attract and retain key users. The tokens go to so-called miners, whose powerful computers order transactions on their platforms. Ether issuance is 4.5% annually. Thanks to a software upgrade a year ago, the network is also burning — literally destroying — a percentage of Ether transaction fees. The net supply increase is 2%. Less of a boost.
Ethereum’s newest upgrade, the Merge, is expected next week. The upgrade will shift the blockchain from using miners to more energy-efficient validators for ordering transactions, slashing the amount of fresh Ether distributed to reward important entities by 90%. The network will burn Ether. According to the Ethereum Foundation, that should bring net currency supply inflation to zero or less. Ultra Sound Money expects Ether supply will peak during the Merge before declining.
Some believe Ether’s steady or declining supply could boost the value of all coins. Ether has gained 4% in September before the Merge.
When deflation will start is uncertain. ConsenSys, an Ethereum infrastructure provider, forecasts deflation in 2023. Ether burn is connected to network transaction volume, which has slowed. After the Merge, Ethereum glitches or other hiccups could temporarily reduce activity.
Ethereum’s developers have changed the network’s coin supply structure multiple times. Ether’s deflationary state may not last forever. With so much of crypto powered by speculation, Ether price moves typically have little to do with fundamentals.
In a world where inflation is destroying hard currency purchasing power, deflation as a potential relief in crypto has appeal.
Hopes for Cryptocurrency Rest on the Ethereum Merger as Bitcoin Loses $19,000
Original Source: As Bitcoin Loses $19,000, Crypto’s Hopes Rest on the Ethereum Merge
Even Ethereum’s “Merge” may not be enough to stop Bitcoin and the crypto industry from bleeding.
Bitcoin crashes crypto market
September has started out difficult for Bitcoin and its smaller siblings, as is tradition in the crypto industry.
Bitcoin fell below $19,000 for the first time since June’s liquidity crisis. Bitcoin is trading at $18,730, down 5.8% on the day, according to CoinGecko. It’s 70% below its November 2021 peak.
Bitcoin’s current selloff has struck Ethereum, BNB, Cardano, and Solana even harder, bringing the global cryptocurrency market capitalization below $1 trillion.
The crypto market showed hints of resurgence throughout the summer after Three Arrows Capital and Celsius and Voyager Digital collapsed. Ethereum and other assets surged more than 100% from the June bottom, helped in part by slowing inflation rates and relatively conservative moves from the Federal Reserve, but the market’s bullish momentum was called into question in mid-August when Bitcoin failed to break past $25,000 (Crypto and other asset classes took a big hit on August 26 after Fed chair Jerome Powell warned of further “pain” for markets in a speech at Jackson Hole; he reiterated that the U.S.
The Merger: Market Saver?
September is a bad month for crypto values, and the market extended its late summer fall this week. In recent weeks, traders have looked to Ethereum’s “Merge” to Proof-of-Stake as a possible recovery catalyst, enabling Ethereum and related assets like Lido and Ethereum Classic climb. The Merge, one of the most major crypto events in recent years, began Tuesday with the activation of Ethereum’s Bellatrix upgrade. The main event is expected a week from now. Bitcoin’s decline has hurt Ethereum and other assets. ETH is trading at $1,508, 69% below its all-time high.
With Bitcoin representing 36.5% of the overall cryptocurrency market cap, crypto’s faithful will hope interest in the top crypto rebounds like it did for Ethereum during the summer.
The Merge will enhance Ethereum’s energy efficiency by 99.99% and cut ETH issuance by 90%, but it won’t affect Bitcoin. A Proof-of-Stake Ethereum is anticipated to reveal Bitcoin’s dependency on an energy-intensive Proof-of-Work consensus mechanism, something Elon Musk and numerous significant institutional players emphasized in 2021. Bitcoin has lost ground to Ethereum in recent weeks, leading the second crypto’s top supporters to advocate for a “flippening”
Ethereum’s foundations have never looked better, yet ETH has seldom survived BTC’s greatest collapses. With crypto in a bear market for almost a year and macroeconomic issues like rate rises and the European energy crisis still spooking investors, it’s hard to see how the market will turn bullish in the months ahead. Even the greatest crypto event in years may not be enough to inspire crypto’s passionate believers.
Summary of today’s Bitcoin and Cryptocurrency news
As a result, following the consolidation, Bitcoin’s future is unclear. Numerous elements are at play, including regulation, energy worries, and competition. Inventors are apprehensive about the potential financial dangers at a time when their main competitor is ready to claim a significant technical advantage.
Meanwhile, given that inflation is steadily undermining the purchasing power of real currencies around the world, the prospect of deflation offering some relief in at least one area of cryptocurrency is appealing.
Finally, even the most monumental event in the history of cryptocurrencies may not be enough to restore faith in the sector, as evidenced by the recent selloff.
