Ethereum 2.0. What will happen in case of update failure, opinions of our Crypto-Upvotes experts
Our experts told about its effect on cryptocurrency market “Merger” of Ethereum , and what will happen if it fails.
According to Ethereum developers’ plans, the blockchain update, also known as The Merge. Or Ethereum 2.0, is planned for second half of September. It is aimed at improving the efficiency and scalability of their network.
The speed of transactions in the network will increase to 100,000 TPS (transactions per second). It is now around 15 TPS, according to analytics platform Kaiko. The update will also improve Ethereum’s protection against coordinated attacks. Such as the 51% attack. In which, the person who controls most of the network. Can forcibly make fraudulent changes.
Phase 0 of the Ethereum 2.0 update, the Beacon Chain, was launched on December 1, 2020. Phase 0 began the blockchain’s transition to a proof-of-stake (PoS) algorithm. Its full implementation will mean the end of ETH mining.
Networks such as Ropsten and Sepolia have already switched to the new protocol. And on the morning of August 11 developers have successfully completed Goerli’s latest testnet upgrade. The tentative start date for the main network migration is September 19.
The cryptocommunity suggests that a bifurcation of the blockchain may occur during the “Merge” process. In this case, two parallel networks will emerge, each of which may have its own ETH token. Also, an update failure cannot be ruled out. These events could have an impact on the cryptocurrency market and token rates. Since the market was sensitive to Ethereum price changes after the completion of test updates.
Increased uncertainty in a crypto market
A failure of the transition to ETH 2.0 is unlikely. As all current updates in test networks are successful. In the worst case, the timing of the transition can be shifted, but not the refusal of the update and not its failure.
That said, the risks of a fork of ETH with a split into two coins, PoW and PoS, have increased in recent weeks. In the case of a fork, the PoW version of ETH will be more in demand at the expense of miners for the first time. Because of the continued ability to mine and accumulate tokens. However, in the long run, the PoS version will be more interesting for investment.
Splitting the network is not dangerous in terms of problems for the team and Ethereum project. But it could lead to uncertainty in cryptocurrency market. For example, it is unclear how long it will take to stabilize tokens, networks, exchanges and wallets. Which will have to account for not one, but two new protocols and two tokens.
Possible temporary collapse of Ethereum price
The market is already pricing in an option with a possible Ethereum upgrade. When the blockchain completely moves to the POS algorithm, there will not be any immediate reaction. If everything is “good and positive” with the market. Then ETH exchange rate will go up one way or another.
If the update will fail or will be postponed. Most likely there will be a local temporary dump of ETH price.
Ethereum has a lot of potential, especially after moving to PoS. There will be additional interest in it. Users will start investing in ETH to create nodes and get extra income from it. Our experts also said that it will open a road for institutional investors. And Ethereum itself will become more environmentally friendly due to the fact that less electricity will be used to mine it.
