Ethereum merge makes crypto more sustainable, but how’s it working out for investors?

The Ethereum network, which underpins most of the cryptocurrency industry worldwide, completed its highly anticipated ‘merge’ last month. The idea was to overhaul the way it functions in an effort to reduce the environmental impact of the computing power it takes to mine crypto, as well as to provide a more efficient and fast network.

Though the merge is unquestionably a good move for the environment, it has highlighted some potential issues. If the new model of operating eventually leads to an increase in the value of crypto as some experts forecast, the time to buy is sooner rather than later. A regulated and trusted broker is a must, and easymarkets.com provides a seamless, safe and advanced trading experience to help you capitalize on all Ethereum market conditions with CFDs, regardless of your trading scenario (bullish or bearish).

Why merge?

Ethereum updated its blockchain from the ‘proof of work’ protocol to the ‘proof of stake’ system last month (September 15th). The adjustment has allowed for a dramatic drop in the use of electricity and also a reduction in noise pollution. Additionally, it was expected to improve the speed of transactions and also make them cheaper.

The proof of work system, which is still used by Bitcoin (BTC) for instance, is the elaborate process of ‘mining’ tokens, where people are compensated with BTC coins for securing the network and adding blocks of transactions to the blockchain. The mechanism is extremely reliant on high amounts of computing power to work, as miners need to solve complex mathematical puzzles, and therefore use a lot of electricity. More than some entire small countries!

The proof of stake system is based on an algorithm that selects an individual at random to build new blocks onto the blockchain. This person gets picked based on the amount of Ether they have decided to stake. The more Ether at stake, the more likely they get work and compensation.

Ethereum believes it saves 99.95% of its previous energy use by doing so, and nothing has changed for users – addresses, wallets, and accounts all remain the same.

What’s the downside?

One of the major drawbacks is that there are now worries that the US Securities and Exchange Commission (SEC) may enact new rules on proof-of-stake cryptocurrencies, which would potentially affect nearly the entire crypto industry.

These rules may lead the SEC to view Ethereum as a security rather than a commodity. This would then require registration with the SEC and a whole host of compulsory company disclosures and regulations that would cause less decentralization.

Is now the time to buy Ether?

Going ‘green’ and the appearance of protecting the environment is an extremely popular business movement at present. Although investors may have been spooked by the threat of tightening regulations, it’s likely they will return soon to the lure of reduced costs and the image of supporting lower carbon footprint methods.

Although Ethereum may be down as much as 60% so far this year, now at $1,476.40 at the time of writing, it could still prove a great time to buy over the long run to take advantage of discounted prices. Also, if you’re an active trader, some great opportunities might lie in Ether volatility.