Crypto holders can’t wait to see the end of May, a month that has brought nothing but losses. And while it’s too soon to say whether the worst is over—Bitcoin is below $30,000 right now and could go lower—it feels like the industry will come through the downturn just fine. So long as the Ethereum merge goes off okay, that is.
If you’ve been living under a crypto rock, “The Merge” refers to the long-awaited upgrade to the Ethereum blockchain that will see the No. 2 cryptocurrency switch to a proof-of-stake model, a change that should eliminate concerns about Ethereum’s environmental impact and dramatically improve its transaction speed.
The Merge is the latest name (the previous one was Ethereum 2.0) for a process that has been underway for years, and has been delayed more times than you can count. But leading authorities on Ethereum, including co-founder Vitalik Buterin, are now saying the event will go down in August when the Beacon chain (a parallel Ethereum blockchain that is serving as test for proof-of-stake) will merge with the main Ethereum chain.
They’d better be right. Crypto badly needs a win right now, and Ethereum pulling off the most important upgrade in the history of blockchain would provide that. It would demonstrate that the Ethereum community—which has a reputation for being friendly but frivolous—is capable of serious business. It could also trigger a major ETH price rally.
While the chances of Ethereum pulling off the merge look promising, there are also reasons for concern. This past week saw the Beacon chain experience a so-called “block reorganization” event that saw its blockchain fork for seven consecutive blocks—a situation that hasn’t occurred for years. While the cause appears to have been benign, it triggered a brief crisis of confidence since the emergence of multiple, competing Ethereum chains after the merge would be a catastrophe.
To their credit, the elite developers helping to facilitate the merge have proceeded patiently and methodically in order to ensure the new Ethereum blockchain will be ready for prime time. And as Kraken CEO Jesse Powell said on a recent episode of Decrypt’s gm podcast, he is not concerned about the numerous delays that have marked the merge process, since success is more important than speed when it comes to something of this magnitude.
Powell is correct but that doesn’t mean the Ethereum merge can drag on much longer. Further delays will trigger accusations that the Ethereum community is not up to the task, and it will mean that the blockchain’s gas fee woes—which are a major impediment to the mainstream adoption of crypto—may never get fixed. The failure by Ethereum to move beyond the energy-guzzling proof-of-work system would also provide further ammunition to environmentalists and politicians who already have it in for the crypto industry.
The bottom line is that the stakes couldn’t be higher for the merge, not just for Ethereum but for the broader crypto industry. Success will bring renewed faith in the future of Web3, while further delays or a botched execution will trigger a price collapse and a new and nasty Crypto Winter. Everyone in the crypto community, including Bitcoin maxis, should be rooting for Ethereum to pull this off. The alternative is a market much worse than the one we’re in right now.
This is Roberts on Crypto, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt Debrief email newsletter to receive it in your inbox every Saturday. And read last weekend’s column: Think Sports Will Back Away From Crypto and NFTs Because of the Crash? Think Again.
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