Ethereum prices on a bullish run ahead of network upgrade

Ethereum (ETH) – the second most valuable cryptocurrency after Bitcoin – has been on a strong bullish trend for four consecutive days. The demand for this digital asset has increased drastically as the date for the new network upgrade for this coin drew nearer. The developers of the Ethereum blockchain had announced last year that the team would be working on upgrading its system to Web 2.0. This upgrade is expected to merge its leading network with the Beacon’s chain, moving its essential operation from a Proof-of-work system to a proof-of-stake system.

The new upgrade will allow investors to stake their cryptocurrency on the Blockchain with lower fees and earn a reward.

Many Investors have recently shown their support for this latest development and considered the project worth investing in. This has created a significant demand for Ethereum across various exchanges pushing the price higher above the $2,000 psychological resistance level during the Asian session today.

Nonetheless, many traders have been speculating on the impact of the current network upgrade on Ethereum price in the long term. Therefore, we have exposed the advantages of this network upgrade and its possible implications for Ethereum for a long time.

Understanding the Ethereum network upgrade

The Ethereum network upgrade is an improvement on the version of Ethereum we have today. It involves transforming Ethereum from using a Proof-of-work mechanism into a Proof-of-Stake tool. The two different mechanisms differ in many respects, each having its inherent advantages and disadvantages.

The current upgrade will result in a combination of the Ethereum blockchain with the new Beacon chain. The Beacon chain utilises the proof-of-stake mechanism and will enable investors to stake their Ethereum on the Blockchain.

The Proof-of-stake mechanism seems to offer many attractive features that the developers seek to harness while developing the Ethereum blockchain.

With the proof-of-stake mechanism, investors can now stake their Ethereum on the network and earn rewards. It will also reduce the high cost of transactions on the Ethereum blockchain. This will likely attract more projects to the Ethereum blockchain, creating more demands for this coin in the long term.

The Proof-of-stake mechanism has been considered more scalable and secure, with a more extraordinary ability to sustain many crypto projects simultaneously.

On another note, the current network upgrade for Ethereum will stop all mining activities on the network and increase demand.

What is the difference between Proof-of-work and Proof-of-work Stake Ethereum network?

Highlights

Proof-of-work

Proof-of-stake

Security

Less secure for running transactions

More secure for running transactions

Energy Consumption

Consumes more energy

Consumes less energy

Speed of Execution

Slow in running intelligent contracts

Very fast in executing smart contracts

Complexity

Very complex

Very simple

Gas Fees

High gas fees are charged

Meagre gas fees are charged

Mining

Supports mining

It does not support mining

Staking

It does not support staking

Supports staking and rewards users

Validators to approve intelligent contracts.

It does not require validators to approve smart contracts

Validators are selected with set rules on the Blockchain

Competition for the right to add new Blockchain

Miners often have to compete for the right to add new Blockchain

Stakers do not have to compete for the right to add a new Blockchain.

Advantages of the Ethereum new network upgrade

  • Low cost for transactions
  • Enhanced Security
  • Highly Scalable
  • Low energy consumption
  • Reduced gas fees
  • Supports staking
  • Environmentally friendly
  • Encourages more projects
  • Expedites the speed for running intelligent contracts

Will the network upgrade influence the price of Ethereum?

The transition for Ethereum from a Proof-of-work mechanism to a Proof-of-Stake mechanism is an essential milestone in its development process. It has the power of reducing the heavy computational power utilised by Ethereum while running smart contracts. Also, the upgrade will help to reduce the gas fee paid for using the Ethereum network and attract more investors. This will impact positively on the Ethereum price in the long term.

Many predicted that this upgrade would have a significant advantage for Ethereum. The projection influenced its price positively as more smart contracts will now be attracted to the Ethereum network. More projects will also be staked on the network, increasing the demand for Ethereum among users. This will likely drive up the price of Ethereum to new highs within the long term.

The current upgrade for Ethereum to Proof-of-stake will further obliterate the mining of Ethereum. This means no new Ethereum can ever be created again. This will help develop intense scarcity for Ethereum over time and positively impact the market prices.

When will the Ethereum network upgrade be completed?

The Ethereum network upgrades to Web 2.0, also known as the Serenity network, have lasted more than expected. This project, Kickstarter, with the first phase completed in 2021, has lasted till now. The second phase of this project, which involves the transition of Ethereum to utilise the Proof-of-stake mechanism, is slated for completion on September 19, 2022. The final stage of this project includes sharding and has been extended till 2023.

Conclusion

The ongoing upgrade for Ethereum has provided an excellent opportunity to invest in the project. The buying volume of Ethereum has therefore increased in the past four days.

Nevertheless, Ethereum remains subject just like every other cryptocurrency to the US dollar dominance. This means the current bullish trend might be temporarily halted ahead of the FOMC meeting minutes to be released this week. Additionally, the possibility of another aggressive interest rate hike during the next Fed session in September will likely negatively impact Ethereum. Investors must apply proper risk management strategies while taking long positions on this pair.

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