Mike Smith

Mike Smith

Ex-investment banker turned crypto investor. Writer for solidcointalk.com

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What’s “The Merge”? The merge is when Ethereum transitions from proof-of-work (PoW) to proof-of-stake (PoS). This will end ETH mining, reducing 99% of its power usage

But that’s not all the merge will do.

 

 

Will it Lower Gas Fees?

Gas fees are caused by network demand. Switching to PoS has little impact on demand so gas fees won’t change. This means Layer2 solutions are still needed post-merge and there is a lot of great L2s to invest in!

 

So, Why Merge?

ETHs overall goal is to become more scalable, meaning lower gas fees, faster transactions and more transactions per second. The merge is an important step towards the ultimate goal of improving scalability and it paves the way for what comes next.

 

What Happens Next?

In 2023 we get sharding. Think of sharding as splitting the entire network into pieces called shards. This means that each node doesn’t need to maintain the entire network but its own shard. This increases transaction speed and cost.

 

Will ETH Flip Bitcoin?

The ETH merge won’t flip Bitcoin right away but long term it creates a scenario in which flipping Bitcoin is possible. Some even argue that it is inevitable. Let’s look at why.

 

 

Deflationary ETH

Mining rewards currently create 13k ETH daily. Post-merge staking rewards create only 1.6k ETH daily. At 16 gwei average gas pirce 1.6k ETH is burnt daily, bringing inflation to 0. With higher gwei we get deflation and deflationary ETH is BULLISH.

 

Eco-friendly ETH

Many institutions won’t touch BTC due to its energy usage. ETH already uses less energy than BTC. The merge reduces it another 99%

Institutional adoption of Crypto is needed for long-term growth and post-merge ETH becomes attractive to institutions.

 

Higher Yields

Post-merge ETH staking yield should increase 50%-100%, bringing it to 6%-8%. ETH is seen as a safe long-term hodl in crypto, almost on par with Bitcoin. With staking rewards soon to far exceed BTC many people will choose to hold ETH over BTC!

 

Smart Contracts

Finally, Bitcoin doesn’t really have smart contracts. To attract businesses to move on-chain they need to be able to build on-chain. This is the biggest limiting factor of Bitcoin. It is a store of value, but for now, that’s all it is. Smart contracts allow many things, such as NFTs, safe transactions and other apps like crypto sportbooks.

 

Wen Flip?

ETH has the potential to flip Bitcoin! Ethereum isn’t even 50% complete. When it gets sharding and all the other features that are coming, there is little reason why it wouldn’t flip it. Unless Bitcoin becomes PoS and gets real smart contracts too.

This is all the reasons why ETH could flip BTC after the merge. Be sure to check out our other articles on all things crypto related.

 

Articles reflect the author's own opinion.

In any circumstances can CCG be responsible for potential losses regarding investments or services, either referenced by the author in the article itself or by any links provided.

This platform is intended to share educational knowledge, open for several external author's and in no way represents any financial advisement.

Editor Note

3 Responses

  1. I presume that Ethereum still holds massive updates in the future. Is it not the right time to utilize the Blockchain to create crypto tokens? Yes, the ERC20 token standard, a popular crypto token standard is completely fungible and known for its smart contract adaptability. If you are a potential investor, you can create ERC20 tokens and kickstart your business in the crypto space. Check out this page that helps you to create ERC20 tokens in a hassle-free way. There are numerous perks of creating ERC20 tokens. You can even launch your own cryptocurrency. Use this Merge and kickstart your crypto business.

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