the Merge will bring greater adoption of Ethereum

According to the famous US bank Bank of America, Ethereum’s Merge update will result in renewed interest from institutional investors who by statute are prevented from investing in cryptocurrencies that rely on the wasteful Proof of Work system.

Ethereum’s Merge continues to give hope

Bank of America says #Ethereum’s merge to proof-of-stake may increase institutional adoption.

— Watcher.Guru (@WatcherGuru) September 12, 2022

With only a few days now until the launch of Ethereum‘s new and highly anticipated update, the Merge, which many experts say should and could revolutionize the entire cryptocurrency industry, considering that Ethereum will move from the Proof of Work consensus system, on which Bitcoin is still based, to the more sustainable and cost-effective Proof of Stake system.

The launch is expected to take place between 16 and 20 September, after the final definitive testnet was completed in late August, which yielded definitely encouraging results and gave the green light from the developers, as also announced by the head of the team, Tim Beiko.

.@Ethereum’s transition to proof-of-stake is happening 🎉

Client releases are out – update your node! First part of The Merge, Bellatrix, happens on Sept 6. Full transition ETA: Sept 15. Mark your calendar 📆! https://t.co/X0DKUmcZHJ

— Tim Beiko | timbeiko.eth 🐼 (@TimBeiko) August 24, 2022

The new update is regarded as one of the major innovations in the crypto industry in the last decade, and it is difficult to quantify the value of this major innovation, as Ethereum founder Vitalik Buterin himself argued a month ago, meaning that the market will only be able to quantify this innovation, once it has come into full swing. 

According to Bank of America experts, the Merge will benefit not only the price of Ether (which is already happening, considering that in the last month and a half ETH has gained about 60% from its June lows), but also on the adoption of the cryptocurrency itself.

The environmental aspects of cryptocurrencies are often a major barrier for many institutions. 

Thus, Ethereum removing its mining requirements and making this turn toward sustainability would open the door for many institutions to enter the asset.

“It is highly likely that the merger will help ETH become more adoptable. being more environmentally friendly brings in a big shift in perception. Furthermore, it might be easier for corporations to invest in an asset that is environmentally less damaging.”

BOFA analysts write.

Of the same opinion, regarding the positive effects of the Merge on Ethereum and the cryptocurrency ecosystem in general, was another major US investment bank, JP Morgan. 

Kenneth Worthington, an analyst at JP Morgan, said in a letter to clients that the Merge could have a very positive impact on Coinbase, one of the largest cryptocurrency exchanges, which from staking activity on the stock could gain up to $650 million after the launch of the upgrade.

The crypto industry analyst firm Chainalysis argues that the Merge would have a major impact on both Ethereum’s stock, which not surprisingly has been overperforming the market since its final launch was announced in June, and on the staking activity, which would be increasingly convenient for investors.

In its latest August report on the cryptocurrency market, Crypto Compare dwells in its chapter on Ethereum specifically on the upcoming Merge update. 

“This would mark the beginning of a new era for Ethereum, which would reduce energy consumption by over 99% as the network moves away from mining and allow for future scaling solutions to be implemented, such as sharding. However, the Merge does not immediately address other issues, such as high transaction fees and low transaction throughput,”

reads the report.

ETH rising in 2022

In 2022, the report shows how ETH futures volumes have steadily increased exceeding spot volumes. 

In August, futures worth $997 million were traded, compared to

$689 million in the spot markets.

Futures products are generally used for speculation, and so these figures show without doubt that speculation on ETH has greatly increased, just ahead of the new update.

The large increase in Ethereum’s prices coincided with the sharp decline, as evidenced by CryptoCompare‘s data of one of the most dangerous rival blockchains, Solana, which until a few months ago was seen as a possible alternative for the promising NFT and DeFi market. 

Solana’s volatility data, never so low in 20 months, show that activity in the market has collapsed, according to analyst firm experts. In one year, Solana’s stock has lost 81.5% of its value.

According to the experts, after the Merge, Ethereum is destined to have a more sustainable and cheaper blockchain, although as also explained by the developers themselves, it is not certain that the fees will have a considerable drop, at least at first. 

But Ethereum developers say they are confident that its completion will lay the groundwork for the launch of new technologies to scale the network. 

The most crucial tool is what is known as sharding, which splits network data into smaller packets, making the network faster and cheaper to use. Buterin said in February that sharding could eventually lower network fees by a lot and thus bring many developers and operators back to his network, which they had abandoned for cheaper blockchains, such as Solana, Avalanche and Cardano.

Ethereum developers are then confident that the move to Proof of Stake will also improve the security of the network, making life much more difficult for hackers, who have never been as active as they have been in the past two years. 

A report by Consensys explained that in order to take control of 51% of the network, more than $11 billion would be required.