Ethereum Merge – ETH To Flip BTC After The “Merge”?

Hey folks, it’s great news: the Ethereum Merge is scheduled to take place in September 2022.

This is exciting because it is a much-anticipated event for the Ethereum community.

As you are aware, Ethereum will switch from the POW to the POS consensus mechanism at the Merge.

Many are predicting that after the Merge, Ethereum will overtake Bitcoin. But is that so?

Well, in today’s post, I will cover all you need to know about the Merge and its potential benefits to Ethereum.

Post Summary

This is what I intend to cover:

  1. What Is Ethereum Merge?
  2. Anticipating The Ethereum Merge
  3. Will The Merge Happen Come September 19?
  4. ETH’s Price Potential After Merge
  5. FAQs
  6. Conclusion

To view the full details of each subheading, just click on it.

Let’s get started!

1. What Is Ethereum Merge?

Ethereum Merge

The Merge is when Ethereum will transition from proof-of-work (POW) to a proof-of-stake (POS) consensus mechanism.

Let’s take a quick trip down memory lane, shall we?

Originally, Ethereum was created as a POW blockchain, which made it slow and very expensive.

But it needs to scale because of its ever-growing adopters.

In December 2020, the Ethereum community launched the Beacon Chain.

It introduced POS to the Ethereum ecosystem, allowing ETH holders to stake ETH as network validators and earn rewards.

Gracefully, the Beacon Chain was envisioned to make the Ethereum network scalable, more secure, and decentralized.

However, since its launch, it exists as a standalone chain, separated from the Ethereum mainnet.

You can think of it as a new engine that hasn’t been installed on the machine. Hope I made sense.🧐 

Now, enter the Merge. It seeks to integrate the Beacon Chain proof-of-stake into the Ethereum network.

Additionally, it will mark the end of proof-of-work for Ethereum and the full transition to proof-of-stake

The Merge is now tentatively scheduled for September 19, 2022.

Since the launch of the Beacon chain, so much has happened in anticipation of the Merge.

I will share some of the updates around the Ethereum Merge in the next section.👇

2. Anticipating The Ethereum Merge

(i) Update 1 – Public Testnets

So far, extensive testing and bug bounties have been undertaken to ensure a safe Merge.

This is because the Ethereum developers have released the Merge on a few public testnets to iron out any issues before the official launch.

A few of these testnets include Kintsugi, Kilin, Ropsten, and Sepolia testnet .

(ii) Update 2 – The Delay Of The Difficulty Bomb

Ethereum difficulty bomb

Another pertinent update regarding the Merge is Ethereum’s “Difficulty Bomb” delay.

It is a code in the Ethereum protocol that increases its mining difficulty over time.

Usually, Ethereum’s average block time is between 12 and 14 seconds, but with the difficulty bomb, it can reach as high as 30 seconds and so on.

The difficulty bomb was designed to incentivize miners to switch from POW to POS when the Merge launches.

It is set to execute after a specific number of blocks have been added to the blockchain.

As the block gets closer to being mined, the mining difficulty increases exponentially, eventually making it impossible to mine blocks.

You see, the difficulty bomb was drawing close until the developers pushed it back by 700,000 blocks on June 29, 2022.

Based on calculations, the delay is roughly 100 days (some estimate it to be around mid-September).

And the Ethereum community was heartily disappointed by this delay, leading to a sharp decline in ETH’s price.

This is because they anticipated the launch of the Merge as soon as possible but the delay in the difficulty bomb means the Merge will be delayed too.

Sadly, it is the fifth time the difficulty bomb has been delayed.

However, the reasons for this delay were:

  • The Merge wasn’t yet ready for mainnet deployment.
  • Also, the Merge was yet to be deployed on two public testnets, Goelri and Sepolia as of the scheduled time.

While these are tangible reasons, it has got many wondering if the Merge will eventually happen on September 19. Keep reading!👇

3. Will The Merge Happen Come September 19?

As earlier noted, the ETH’s developers have scheduled September 19, 2022, as a potential launch date for the Merge.

This is impressive given that it is the first time they have ever set a concrete date for the launch.

And although it is still subject to change, it is something worth being excited about.

The last time we had something close to that was Vitalik’s prediction in May 2022.

According to him, “August is the possible date for the launch if there are no problems, and of course, there is always a problem, September is possible, and October is possible.”

And Vitalik was not the only person to make such a prediction.

Other Ethereum developers, including Tim Beiko and Ben Edgington, are also of the same opinion.

In my opinion, this indicates that there is a good possibility that the Merge will launch on September 19, as scheduled.

Moreover, the notion that the “difficulty bomb delay will delay the Merge isn’t exactly true because the developers said it would not.

Furthermore, the Merge is fast reaching the final stages of its public testnet.

The Sepolia testnet was recently completed, and it will be followed by Goelri, the final testnet before the Merge main launch.

As you can see, all of these point to a possible launch of the Merge as scheduled.

However, our main focus should be on a successful Merge launch instead of an imminent Merge launch.

As you know, Ethereum is the second most valuable blockchain, and a mistake might have costly implications.

Let’s talk about the possible price effect the Merge will have on the price of ETH.👇

4. ETH’s Price Potential After Merge

Price potential of Ethereum after the Merge

ETH increased nearly 40% shortly after the announcement of the Merge launch date.

Impressive! It indicates that many people are bullish about the Merge.

Now, this is not surprising, and I’ll briefly discuss why below:

i. Reduced Ethereum Supply (Deflation)

ETH’s issuance and supply are expected to be significantly reduced come post-Merge.

The current (or pre-Merge) inflation rate is 4.62% per annum.

However, after the merge, it will be reduced to 0.49% (nearly a 90% reduction).

Note that this simply shows Ethereum’s emission rate or issuance rate.

But wait, there’s more!

Firstly, the EIP-1599 upgrade introduced coin burn to the Ethereum network.

Secondly, as with the POS consensus mechanism, validators can be penalized for breaking network rules.

These penalties result in a reduction and immediate burning of ETH from that validator’s balance.

Well, the above points, in addition to the new inflation rate, indicate that ETH’s supply will be greatly reduced after “Merge”. Find the full details.

This has made many believe that ETH will become what is dubbed “ultrasound money” after the Merge.

And of course, a decrease in supply and an increase in demand means a bull run for the ETH price.bull run

ii. Reduced Energy consumption

It is no dispute that POW blockchains are purportedly energy-consuming, whereas POS blockchains are not.

With the Merge in place, ETH will switch from POW to POS, making it less energy-intensive.

It is predicted that energy consumption will decrease by almost 100% following the Merge.

What this will do for Ethereum is two things:

  • Remove it from the misleading energy-intensive news around POW blockchains.
  • Make it attractive to ESG investors, i.e., investors who put into consideration environmental, social, and governmental issues before investing.

Surely, if these investors pull money into ETH, then we expect to see ETH’s price increase significantly.

Let’s meet at the FAQ section!

5. FAQs

1. Should we expect lower gas fees and faster transactions following the Merge?

-For the former: No, it will not result in lower gas fees. This is because the Merge is a change in consensus mechanism, not a network capacity expansion.
-For the latter: The Merge won’t increase transaction speed. However, Ethereum will rely on Layer 2 scaling solutions.

2. The Merge is ETH 2.0, right?

Not exactly! The term ‘ETH 2.0’ has been deprecated.
You see, the Merge will join ETH1(execution layer) and ETH2 (consensus layer) together.
This means that after the Merge, ETH1 and ETH2 will now exist as a single chain. So, there won’t be a need for ETH2.
Learn about the blockchain layers.

3. Can I withdraw my staked ETH after the Merge?

No, you can’t yet withdraw your staked ETH and your staking rewards after the Merge.
But it will be possible after the Shanghai upgrade; the next Ethereum upgrade.

4. Will ETH overtake BTC after the “Merge”?

No one knows for sure.
However, some people believe ETH can overtake BTC because of Ethereum’s new inflation rate after Merge.
The BTC inflation rate is 1.73% per annum, whereas ETH is 0.49% per annum following Merge. You got it right?👍

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6. Conclusion

The Merge is one of the most significant upgrades in the history of Ethereum.

And the Ethereum community is very much anticipating it.

Poly Market already features a trading room where anyone can bet on the Merge launch date. This shows how excited the community is about the Merge.

Moreover, the Merge is expected to attract more investors and drive ETH’s price through the roof.

This is where we call it a wrap.

It’s time to give your feedback.

What do you think about the Merge launch date? Do you think it is achievable?

Do you think that ETH will flip BTC following the Merge?

Let me have your thoughts in the comment section.

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