Why the Merge affects everyone and not just Ethereum holders

We are now days away from the highly anticipated launch of the new Merge update for the Ethereum network, which will move the consensus system toward Proof of Stake, which is more sustainable and cost-effective than the current Proof of Work.

Ethereum’s Merge, the event everyone is waiting for

The whole crypto world is in turmoil, not just holders of the ETH token, over what promises to be the biggest revolution in the industry in a decade.

In a recent article, Chainalysis talks about the effects on ETH’s price of the new update but also on the blockchain network functionality itself, but it also talks about the big implications such an innovation will have on the crypto industry in general. The effects on mining, staking, and cryptocurrency adoption in general could be considerable, according to analysis by experts at the crypto and blockchain analytics firm.

The effects of Merge’s final launch announcement alone have already had a significant impact on the price of the ETH token, which has gained about 59% in the past two months, after its price had slipped below $1,000 in June. But this according to many experts would be just one of the effects that the Merge may have not only on Ethereum but the whole industry in general.

Stefan Rust, CEO of blockchain development house Laguna Labs, for example, is absolutely convinced that this new update may have major repercussions not only on those holding Ethereum but on the entire cryptocurrency ecosystem.

“There is no doubt that the merge is very big news for crypto, and it is also increasingly big news for the wider world. Indeed, when Google adds a feature to its search engine like a countdown timer to the anticipated event – you know the buzz is spreading,”

Rust said.

According to the crypto expert, the price of Ethereum, despite suffering from the turmoil related to the war and rising inflation in recent days, will rise to $3,000 by the end of the year, and this is a view shared by other industry experts as well. The Merge could also result in the so-called “Flippening” effect, which is when its capitalization surpasses that of Bitcoin, which is currently just over twice that of Eth.

“This is a pretty bold claim, I know. However, bitcoin has somewhat lost its way. It’s been appropriated by traditional finance houses and institutions, which are now using it as any other kind of alternative investment asset. As such, while main markets remain depressed, bitcoin has almost no momentum to go higher,”

Rust said.

This thesis would be supported by the fact that Bitcoin may suffer much more than Ethereum from the negative influence of the equity markets, especially the Nasdaq, to which it now appears to be correlated. Whereas Ethereum with this update, according to Rust, will have explosive effects on the speed and sustainability of its network, which will become increasingly attractive to developers and also certainly cheaper than now.

But not everyone seems to be as optimistic as the CEO of Laguna Labs, while acknowledging the importance of the new update on the entire cryptocurrency ecosystem. “This is the most significant catalyst in crypto history in terms of its magnitude,” said Travis Kling, founder and Chief Investment Officer of Ikigai Asset Management, a cryptocurrency investment firm, in a recent interview about the new Ethereum update.

“But there are many risks going into this Merge in terms of price, technical design risk, technical implementation risk, hack risk, illiquidity risk… There’s a lot of risk.”

Not least because as the Ethereum Foundation itself has repeatedly explained, the new upgrade for the time being will make the network neither faster nor much cheaper than it currently is, but only much more sustainable, because it will reduce the energy consumption of the network by 99.9%.