PoS — Opening a New Era for Ethereum
On September 15, 2022, Ethereum made history by transitioning to an entirely new consensus mechanism. Instead of using the Proof of Work (PoW) consensus, Ethereum shifted to the environmentally-friendly Proof of Stake (PoS). What does this mean for the crypto community and the investors? How will Ethereum change because of this? Is it a good time to swap your BTC to ETH or not? Let’s explore all this in the article.
What Is the Ethereum Merge?
In plain English, the Ethereum Merge refers to the event where the original Mainnet was merged with the Beacon Chain, the PoS consensus layer. Therefore, it’s the official date when Ethereum became a PoS blockchain.
But the merging process wasn’t that quick. In fact, the Ethereum team has been preparing for the final merge for years, and the community was informed whenever something new was added to the Ethereum protocol as part of the merge.
Differences Between Ethereum’s PoW and PoS
There are many reasons why Ethereum switched from PoW to PoS, and the main one is the practicality of the latter.
PoW has been very power-intensitive, and everyone who wants to be part of it and mine crypto needs robust gear that consumes a lot of power. It’s not very environmentally friendly, and it’s getting hard to get new coins this way.
In PoS, you become a validator by staking your funds — locking them up for a certain period on the Ethereum chain. As a result, you’ll receive some yield on an annual basis. The promised API is more than 5%, but it’s all still very new, and we need at least one year to pass to see if Ethereum will stay true to this promise.
Will the Merge Increase the Price of Ethereum?
It’s still too early to answer this question, as the merge happened quite recently. However, it’s no secret that ETH’s price has been increasing over the last couple of years, with frequent fluctuations, which are common in the world of cryptocurrencies.
Look at it this way: the all-time high for ETH was $4,891.7, which was reached on November 16, 2021. The three-month highest in the previous period was $2,016. However, it happened one month before the merge was to take place, and it seems that the price dropped after that, with the current value being around $1,500.
But none of that means anything, really. In fact, if you take a look at the long-term predictions, they are very favorable for Ethereum. So if you want to convert your XMR or BNB to ETH, there’s a reason to believe it’s a good move.
ETH Price Prediction
According to DigitalCoinPrice, Ethereum’s average value will reach $2,209 by 2023. By 2024, the average will be $2,877, and the price will increase to $3,552 by 2025. By 2030, the average price of a single ETH unit will be $9,301.
Cryptopolitan’s short-term predictions are also rather optimistic for Ethereum, as it will reach around $2,141 by 2023. The popular site predicts that the average price will be approximately $3,052 by 2024 and $4,350 by 2025. Cryptopolitan uses a different prediction algorithm compared to DigitalCoinPrice, which is why the predicted price will exponentially grow, reaching an average of $29,861 by 2030.
Gov.capital’s prediction is for five years. According to this platform, in exactly five years, the average price for Ethereum will be $17,408.
Bear in mind that all of these predictions are just that — predictions. They shouldn’t be taken into account as static pieces of information.
What Is the Future of Ethereum?
Ethereum is the second most popular cryptocurrency in the world. However, what Ethereum has as an advantage compared to the first-placed crypto is the platform for developing and using smart contracts and decentralized apps. If you add the Proof of Stake consensus mechanism to the equation, you get a pretty powerful platform that has great potential in the future.
Still, whatever your next move regarding ETH, we recommend doing your own research first, as it can help you understand the market better and avoid some of the pitfalls.