In about a week, if things keep going as smoothly as they have been, Ethereum will complete its “Merge.” That means its proof-of-stake “testnet” will merge with the cryptocurrency’s proof-of-work “mainnet,” and complete the transition to proof-of-stake validation.
There will be some big impacts – both right away and in the long term.
I’m seeing a lot of fretting and tut-tutting in the mainstream media. Time, for one, speculates the Merge could crash the network and ETH’s price – two really miniscule risks doomsayers, bears, and Bitcoin maxis seem to have latched onto.
That’s just FUD designed to draw clicks – don’t pay attention. You know I’m all about a crypto project’s team – the first of my “5 Ts” – and, aside from Cardano’s (ADA) developers, Ethereum’s team is probably the best in the world right now. These folks aren’t going to fumble at the one-yard line.
While I’m at it, don’t pay attention to people calling for Ether to hit $500,000 by early October, either.
But there are going to be opportunities to make money – and the people who make the right moves could 2X their stake or even better on this event. I’ll get to that in a minute.
The Merge will be a good thing, from here out, both in the short and long term. Here’s what to do about it…
What the Merge Will Do for Ethereum
The Ethereum network’s energy demands will drop by more than 99% in a hurry, with all the primary and secondary benefits that brings. Right now, companies are falling all over themselves trying to burnish their environmental, social, and governance (ESG) cred for billions of consumers who are starting to get really freaked out by the catastrophic droughts, wildfires, and hurricanes hitting every other week. A cryptocurrency that just slashed its own massive carbon footprint looks better and better.
The “gas fees” for using Ethereum, which have been crazy high at times, could end up coming down in the long run. It’ll be easier – faster and cheaper – to use the crypto. That’s not because of the Merge itself, necessarily, but because this update will make it much easier to scale up the network – that’s what would eventually, in theory, help push down fees and boost speeds.
Some of Ethereum’s founders, like Vitalik Buterin and particularly Joe Lubin, are aiming for “infinite transaction-per-second capacity” which is far off at this point, but the Merge takes it several steps forward. Those guys are understandably bullish.
And of course there’s the big reduction in the rate of new ETH issuance. Ethereum had already reduced the rewards for its miners, and the Merge promises an even bigger reduction in that daily number – and over time, that becomes a big deal.
Miners generate around 13,500 ETH every day. Post-merge, that drops to 1,350 a day. After a year, there would be nearly 4.5 million fewer ETH in the market. That kind of supply-and-demand picture is mighty bullish.
The biggest, most immediate benefit will be for Ethereum’s security. As it stands now, Ethereum is vulnerable to so-called “51% attacks,” where an entity who takes control of 51% of all the network’s computing “work” power can hijack the network. That’s happened to Ethereum Classic (ETC) several times.
On a proof-of-stake network, that can’t really happen. Even better, transactions will be finalized once the whatever block is validated by stakeholders – a benefit of a proof-of-stake protocol. That makes it harder for bad guys to mess with transactions.
People like us, who own Ether, won’t really notice a change as the Merge completes. It should be completely seamless for “end users.” So whether you’ve got your ETH in cold storage, or a hot wallet, or on an exchange somewhere, or, most likely some combination of those three, you won’t be affected.
So you don’t have to do anything now, and you won’t have to do anything afterward.
Here’s What You Should Do
But there are some ways to get ready and cash in.
The first thing to do – right now – is to buy some ETH. I’m not kidding: right now. Open up a browser tab or fire up your smartphone and get on that. Grab some Hang onto it for the long-term. Some of my colleagues have published five- and ten-year price predictions in five or six figures.
But, the biggest profits will go to people who know how trade Ethereum options. Yes, there are crypto options out there, and regular people like us can get into them.