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Ethereum: Two glimmers of hope for crypto investors as crash stabilises

·3-min read
Ethereum's price held steady amid signs its proof of stake blockchain shift is imminent
Ethereum's price held steady amid signs its proof of stake blockchain shift is imminent. Photo: Dado Ruvic/Illustration/Reuters

Ethereum's price has consolidated after another signal that the 'proof of stake' merge is fast approaching.

Two recent announcements that ethereum's merge is imminent have encouraged investors to prepare for a bullish breakout of the world's second largest cryptocurrency.

Ethereum's merge will see the energy-intensive proof-of-work mining cease on the network and a complete shift to a proof of stake blockchain, called the Beacon chain.

This is important because proof of work consumes vast amounts of electrical power and its use is controversial given that the planet is facing a climate crisis.

In comparison, the switch to a proof of stake consensus mechanism will reduce the energy use of ethereum by 99%.

On Wednesday ethereum (ETH-USD) was trading just shy $2,000. Ether was at $1,975, still down nearly 6% in one week.

Read more: Crypto live prices

Whereas bitcoin has held its ground, hovering about $30,000, with a rise of nearly 2% in the last 24 hours.

Announcement from OpenEthereum has been interpreted as a second signal that the cryptocurrency's merge is happening soon.

OpenEthereum said on Wednesday it has ended support for its proof of work mining software on ethereum, in preparation for the upcoming Ethereum Merge.

Read more: Crypto: Stablecoin storm spreads after billions of tether is cashed out

In a Twitter thread, the OpenEthereum team explained that "the usefulness has run its course” for its proof of work mining software.

The OpenEthereum team added, “we look forward to the next phase of clean, green and massively scalable blockchain infrastructure".

By "clean and green" they mean a transition to a proof of stake consensus mechanism on the ethereum network.

This statement by the OpenEthereum team comes after an announcement from Vitalik Buterin that ethereum's transition to proof-of-stake will happen this August.

Read more: Bitcoin drops 50% from November peak

Speaking about the merge to a less energy intensive 'proof of stake' consensus mechanism at the ETH Shanghai Web 3.0 Developer Summit, the Ethereum founder said: “If there are no problems, then the merge will happen in August."

A consensus mechanism such as 'proof of work' and 'proof of stake' is how a blockchain verifies transactions in a decentralised manner.

The merge to proof of stake is part of the Eth 2.0 upgrade that aims to enhance the speed, efficiency, and scalability of its network so that it can process more transactions and ease bottlenecks.

Many cryptocurrency firms have set up stalls around the venue of this year's World Economic Forum’s annual meeting in Davos.

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), had said in her speech on Monday that cryptocurrencies like bitcoin (BTC-USD) are not money.

Georgieva said: “Bitcoin may be called a coin, but it’s not money. A prerequisite for something to be called money is to be a stable store of value.”

Watch: Steve Hanke: 'Cryptocurrencies are fiat money on steroids'

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