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Ether (ETH) price rises after final Ethereum merger testnet

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Ether (ETH) price rises after final Ethereum merger testnet

Omar Brands | Light flare | Getty Images

Ether peaked in two months after the developers successfully completed a final dress rehearsal for a crucial update that is expected to happen next month.

The world’s second-largest cryptocurrency soared as high as $1,927 on Thursday, marking its highest level since early June, according to data from CoinMetrics. The token last traded at $1,912, up 5% in the past 24 hours.

On Wednesday, Ethereum made its final run for the “merger,” a key event that should make it faster and more energy efficient. One of Ethereum’s testnets, called Goerli, simulated a process identical to what the mainnet will run in September. Testnets allow developers to experiment and make necessary adjustments before updates are released on the main blockchain.

The merger will see the transition of the underlying Ether blockchain from a proof-of-work system to a more efficient model called proof-of-stake. Proof of work consensus mechanisms rely on crypto miners to verify transactions. Proof-of-stake networks, on the other hand, require validators to hold a certain number of tokens to participate, which makes them much less energy-intensive. The event, which has been repeatedly delayed, is now set to take place on September 19.

Once finalized, the upgrade is expected to speed up transactions on the Ethereum network and make it more energy efficient, with backers hoping it will address criticism on the environmental impact of cryptocurrencies. This has led some investors to bet that ether could end up stealing the thunder from bitcoin. Bitcoin has lost ground to other tokens in recent years, with its market dominance slipping below 40% from nearly 70% at the start of 2020.

For IT specialist Kaj Burchardi, whether Ethereum will eventually overthrow bitcoin as king of crypto is “pretty much irrelevant” since the two don’t directly compete with each other.

“Why you buy bitcoin, from a mental standpoint, and what you actually want to do with it is fundamentally different than when you use ethereum,” said Burchardi, managing director of BCG Platinion, the IT division of Boston Consulting. Band.

“Ethereum…is not a use case. It offers the possibility of implementing very good use cases like NFTs [nonfungible tokens] and banking products on one platform. Bitcoin is one use case.”

Following the success of the merger test, ether led a broad rally among digital assets on Thursday, with the combined value of all cryptocurrencies soaring by more than $70 billion in one day to $1.2 trillion. Bitcoin rose 6% to a price of $24,507, hitting a nearly two-week high, while Binance BNB the token was 3% higher at $330.

Yet investors have soured on cryptocurrencies more generally following the catastrophic implosion of $60 billion stablecoin terra, which sent shockwaves through the crypto market and helped trigger the collapse of investment firms Celsius, Three Arrows Capital and Voyager Digital. The entire crypto market has lost almost $2 trillion since hitting a high above $3 trillion in November.

– CNBC’s MacKenzie Sigalos contributed to this report

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