Eyes on Ethereum Ahead of 'Merge Upgrade'... Soaring Prices

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Investors' attention is focusing on Ethereum, the leading altcoin, as it prepares for the upcoming Merge upgrade that will transition its blockchain system.

The Merge upgrade primarily involves switching Ethereum's blockchain algorithm from the existing Proof of Work (PoW) method to Proof of Stake (PoS). Proof of Work means participating in the blockchain through computer computations and receiving rewards, i.e., mining coins as compensation. In contrast, Proof of Stake means staking held cryptocurrency in the blockchain to participate in validation and creation, receiving coins as a reward. Analysts also suggest that the Merge upgrade could partially resolve carbon emission issues.

The Merge upgrade is expected to be executed within the next 20 days. As the upgrade approaches, investors have started to show interest in Ethereum. In a situation where mining difficulty is increasing, the Merge upgrade can address the insufficient scalability.

As investor interest surged, prices also rose. Compared to a week ago, the price increased by more than 11%. Compared to early July, it surged nearly 60%. Analysts predict that if the Merge upgrade is successfully completed as the market expects, the prices of Ethereum and related cryptocurrencies could continue to rise.

Furthermore, if the Merge upgrade is successfully completed, the next phase, the Surge upgrade, is scheduled to introduce sharding starting next year. Sharding is a technology that splits data to be processed by shard chains, expected to increase Ethereum's data processing capacity and improve transaction speed and scalability.

However, there are factions opposing the Merge upgrade. As a result, there is a movement to hard fork the Ethereum blockchain and create a PoW-based 'ETHW (tentative name)'. A hard fork refers to the process where a new cryptocurrency splits off from an existing blockchain-based cryptocurrency. Some cryptocurrency exchanges have announced plans to list ETHW, and platforms like Binance are reviewing whether to list it.

Nevertheless, analysts believe that Ethereum Classic will receive more attention than ETHW despite the hard fork. Ethereum Classic emerged after the Ethereum network's 'The DAO' hacking incident. Due to the hack, developers decided to move the blockchain via a hard fork. The new blockchain is the current Ethereum, and Ethereum Classic maintained the original chain in opposition. Ethereum Classic supports the Proof of Stake method. Ethereum founder Vitalik Buterin said in July, "If you prefer Proof of Stake, you should consider moving to Ethereum Classic," calling it a "great chain."

This content was produced with the assistance of AI translation services.