- Over the past week, Ether has gained over 16%, while Bitcoin just a little over half that amount, mainly because of a successful soft launch of what’s called the “Merge.”
- If fully adopted in the coming months, which many investors expect to be the case, Ethereum will be able to handle more transactions than ever before, at greater speed and for lower transaction fees.
Always the bridesmaid never the bride, through the relatively short history of cryptocurrencies, Ether has always played second fiddle to Bitcoin, not just in terms of visibility, but also price action.
That changed last week when the world’s second largest cryptocurrency by market cap, Ether, moved beyond its statistical correlation with Bitcoin, advancing in greater magnitude and faster than the benchmark cryptocurrency.
At its core are prospective upgrades to the Ethereum’s core software that could potentially see it move to a proof-of-stake means for securing its blockchain that would shake off the long-held view that cryptocurrencies harm the environment.
Over the past week, Ether has gained over 16%, while Bitcoin just a little over half that amount, mainly because of a successful soft launch of what’s called the “Merge.”
The last test of this software started on March 15 and despite some initial glitches such as minor error messages, appears to be running smoothly.
If fully adopted in the coming months, which many investors expect to be the case, Ethereum will be able to handle more transactions than ever before, at greater speed and for lower transaction fees.
More importantly, the Ethereum blockchain will be secured using less electricity and run far more efficiently.
While there are other blockchains that use proof-of-stake, none has had the same level of popularity, development and applications as Ethereum, which remains heads and shoulders ahead of the rest.
If Ethereum shifts successfully to a proof-of-stake, being the second largest cryptocurrency by market cap and having been around the longest makes it a potential investment target for more ESG-conscious institutional investors who may have wanted to go in on Bitcoin, but could not due to their ESG-restricted mandates.
The move will also lower the total supply of Ethereum available in circulation.
Those holding Ether can “stake” their Ether in special staking wallets that will secure the Ethereum blockchain and help to order transactions, meaning that the total supply of Ethereum for other purposes would diminish.
While this would potentially increase the price of Ether, the larger amounts of transactions facilitated would result in lower fees as gas fees and prices would come down – gas is the transaction fee for Ethereum.
Stakers will receive Ether as a reward for staking and may be less likely to be pressured to sell Ether because they won’t be incurring operating expenses in dollars to mine the cryptocurrency.
