Ether promised to do better. It promised to take it to the next level, outperforming crypto competitors and even outpacing the godfather, Bitcoin. But the clock is ticking.
The No. 2 cryptocurrency was supposed to be weeks away from “consolidation,” a transformative June upgrade of the Ethereum blockchain to make it faster, cheaper and less energy-hungry, keeping the potential for a leaner and cleaner crypto future.
The ether forecast has supported this year, even as inflation and monetary tightening have constrained bitcoin. But that merger – which would see ether mining transition from a power-intensive Proof of Work method to a Proof of Stake – has been delayed, frustrating investors.
“The timeline for seeing this launch continues to stretch,” said Brendan Playford, founder and CEO of the decentralized financial data platform Masa Finance.
“It is certainly plausible that the prospective Ethereum upgrade to Proof of Stake could be delayed again given that this transition is very complex and it remains uncertain whether it can deliver on its promise to reduce costs and increase transaction speeds.”
Ether fell 8 percent from $3,215 to $2,947 (€3,003 – €2,752) on April 11, the day Ethereum lead developer Tim Peko said on Twitter that the June rollout had been delayed as testing continued. It is down 13 percent this month, at $2,844 (€2,656)
“It won’t be June, but it will probably be in the next few months,” Biko wrote in his tweet. “There’s no confirmed date yet, but we’re definitely in the final chapter.”
The timing of the merger – Ethereum’s ETH1 chain will merge with a new chain to create ETH2 – remains unclear, although many crypto watchers expect it to happen sometime this year. Beiko did not respond to a request for comment via Twitter and LinkedIn.
Ether has a market capitalization of around €340 billion, less than half of Bitcoin, and together, the two make up 60 percent of the cryptocurrency market.
However, Bitcoin remains just an investment without any real ability to be used for contracts in decentralized finance applications. For this reason, many investors believe that market volatility is inevitable – it’s called “volatility” in crypto circles – as the merger acts as a catalyst for Ethereum to become the dominant platform.
“We’re seeing money trading in Ethereum in preparation for the consolidation, although we don’t know when that will be,” said Noel Acheson, Head of Market Insights at Genesis Trading. She said the purchasing interest “indicated that more funds appear to be estimating that (Ethereum) may be undervalued at this point.”
Bitcoin and Ether are either mined or produced using the Proof of Work (POW) method, in which thousands of miners or network nodes compete to solve complex mathematical puzzles.
This is a process that consumes a lot of energy and is estimated to pollute more than a small country each year, raising concerns about cryptocurrencies in a low-carbon world.
An alternative Proof of Stake (POS) method uses much less power because instead of making millions of computers race to process puzzles, it allows the nodes with the most coins to validate transactions.
Ethereum has always been bogged down by issues of speed and processing costs. It only processes 30 transactions per second as a blockchain proof of work, but expects to process up to 100,000 transactions per second once it goes to the POS.
This will allow it to compete with other smaller coins such as Solana and Cardano, which partially or completely use POS for decentralized finance applications such as trading, investing, borrowing, and even non-fungible tokens.
This is on the condition that Ethereum gets its upgrade.
“People who believe in ‘volatility’ think it’s coming very soon,” said Atchison of Genesis Trading. “But it’s just a theory and it remains to be seen.”