ETH: Urge or Scourge?
History doesn’t repeat, but it rhymes
Ethereum has been called the “digital silver” to Bitcoin’s “digital gold” by people who don’t know any better, but the two cryptocurrencies are very different. Bitcoin is a true cryptocurrency, while Ethereum turned that code into smart contracts, the binary bits upon which whatever we’re calling the future — “web3,” “the metaverse” — will emerge. The #1 has no true competition, while the #2 has a swarm of “Ethereum killers” nibbling away at its market share. And the founder(s) of the king crypto, Satoshi Nakamoto, is/are anonymous, while Vitalik Buterin is on the cover of TIME:
This year, the two will further diverge. While Bitcoin remains wedded to the energy-intensive proof-of-work system that was very nearly banned by the EU this month, Ethereum’s blockchain will converge into a proof-of-stake system that was rebranded away from “Ethereum 2.0” because come on, it’s not 1997 anymore (or is it?). Instead, Eth2 will now be split into five separate stages called — not kidding — The Merge, The Surge, The Verge, The Purge and The Splurge.
I can’t explain any of this, and don’t really need to. But they’re hitting their marks, with the Kiln testnet going live on March 14.
The changes are giving courage to Ethereum’s backers, with claims that the transition will nearly eliminate emissions, double or even triple staking yields, and even turn the ETH coin into a deflationary asset.
But nothing like this has ever been attempted at such a scale, and some developers think it will be too complex to manage.
ETH is currently hanging around $3,000, which is down about 38% from its all-time high. But it’s swung up 16% in the last month or so since its convention in Denver ended (which had something billed as “the world’s first NFT bong,” because of course it did). It’s also gained 22% since its most recent major upgrade, last August’s EIP-1559, a.k.a. the “London Hard Fork.”
If the news continues to be good, ETH should continue its upsurge against both USD and BTC, and may also turn the tide against its layer-1 competitors like SOL, AVAX and ADA.
However, one lingering problem not solved by the quintet of -erges is the continually high gas fees — which means any gain for ETH will probably also augur good news for layer-2 tokens like MATIC and LRC.
Also, ETH investors have locked a total of 10 million coins up for the original Eth2 staking contract, an amount now worth $30 billion. When those are unlocked, it may dent the price as some investors choose liquidity.
But until then, buyers who feel the urge should probably pull the trigger.
(Disclaimer: I own ETH and have locked some for Eth2.)
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