It’s an exciting time for all the Ethereum investors as ETH is holding in this bullish market. Bitcoin is trending sideways so the risk on the market is relatively low. So, what’re the new happenings that might affect Ethereum price? How will it affect other altcoins and which are the best coins depending on your needs and wants? Also, terms such as Ethereum and Bitcoin will be used interchangeably with ETH and BTC.
Ethereum and the Coming Months
Do your altcoins bleed against Ethereum? Chances are that 90% of you answered “Yes”. The other 10 % of you are Ethereum only fans. All of you should be excited because things are moving fast behind the scenes. Therefore, as we are speaking, ETH bleed against BTC is minimal or non-existent. This is great news, as Q4 is usually being the worst part of the year for ETH. Another great sign is the stated and stable rise that should protect it from possible down year in 2022.
Either way, the eternal question remains. Will Ethereum flip Bitcoin? The answer is probably, Yes. Will next year be the year? Well… there are reasons for optimism. Let’s look at some.
Ethereum Strengths
Reddit will be tokenizing its karma system on the Ethereum network.
Tokenizing means that further development and use of the underlying karma system code will be incentivized by token currency. The token will be using the Ethereum blockchain and since Reddit has over 500m users that’s a big boost to the network Ethereum 2.0 is. As per estimates, it should hit by April or May next year and will be seeing Ethereum fully changing from POW to POS.
POW Vs. POS
POW stands for Prof of Work and is the method of transaction validation Bitcoin and Ethereum 1.0 use. You have many computers competing against each other in solving complex math problems, the winner of which gets to validate the transaction.
POS stands for Proof of Stake. So all the transaction users put up a stake which makes them eligible to be picked by the algorithm to be the next validator. The algorithm takes the size of the stake, the history of prior validation and some RNG for good measure to decide on the next validator.
Now, POW has many advantages that make it more appealing to investors and in that securing the ETH value. It’s faster and more energy-efficient. On the speed front, this doesn’t just mean faster transactions which should out-speed even VISA, as per predictions. No, by speed we mean that software updates will be coming at a pace of a few days or weeks. Compare that to Bitcoin (POW) who’s last update took over 4 years to arrive.
Ethereum Proof-Of-Stake and Its Advantages
On the energy side, POS is a major improvement over POW. The computational power used in the voting algorithm pales in comparison to the extreme energy requirement of the POW math problems. There are some additional cherries on top that sweeten the deal for Ethereum users.
First is the partial fee burning. So, in POW, the user whose computers solved the problem gets a fee for doing that to incentivize the whole business. Now, Ethereum was pretty bad storage of value prior to this update because it leaked the limit on the number of blocks that it can create. This caused it to have a rising stop of inflation, unlike Bitcoin who has a 21m block limit. Now with the new update, a part of the fee is being burned ensuring that every new block is a bit more valuable than the next.
The final cherry on top is the 50M investment that Matter labs received just a few days ago. Matter labs is, of course, the research/engineering company working Ethereum 2.0. This large investment shows the general optimism surrounding the Ethereum project which appears not to be stopping any time soon.
