It happens after ethereum, the network that supports ether, did a successful final test run for a key event called the “merge.”
After Ethereum inched closer to its long-awaited upgrade, the price of ether skyrocketed to a height not seen in the past two months.
It occurs as a result of the fact that ethereum, the network upon which ether is built, has successfully completed its final test run for a significant event that is referred to as the “merge.”
Ether went up to a level not seen in two months after developers finished a final dress rehearsal for a major upgrade that will happen next month.
According to data from CoinMetrics, the second-largest cryptocurrency in the world reached a high of $1,927 on Thursday. This was its highest level since early June. The token was last traded for $1,912, which is a 5% increase from the day before.
On Wednesday, ethereum did its last test run for the “merge,” a big event that should make it faster and use less energy. One of Ethereum’s test networks, Goerli, ran a simulation of the same process that the main network will run in September. Testnets let developers try out new things and make any needed changes before putting updates on the main blockchain.
The merge will change ether’s blockchain from a proof-of-work system to a proof-of-stake system, which is more efficient. Proof-of-work consensus systems rely on crypto miners to check that transactions are valid. Proof-of-stake networks, on the other hand, require validators to hold a certain number of tokens in order to take part, so they use a lot less energy.
The event, which has been put off more than once, is now set to happen on September 19.
Once it’s done, the upgrade is expected to speed up transactions on the Ethereum network and make it use less energy. Those who support it hope it will answer concerns about how cryptocurrencies affect the environment. Because of this, some investors think that ether could end up taking bitcoin’s place. In the past few years, Bitcoin has lost some ground to other tokens. Its market share is now below 40%, down from almost 70% at the start of 2020.
IT expert Kaj Burchardi says it doesn’t matter much if ethereum replaces bitcoin as the top cryptocurrency because the two don’t directly compete with each other.
Burchardi, managing director of BCG Platinion, the IT-focused division of Boston Consulting Group, said, “From a mindset point of view, the reason you buy bitcoin and what you want to do with it are fundamentally different than when you use ethereum.”
“Ethereum is not an example of a use case. It opens up the possibility of putting NFTs (non-fungible tokens) and banking products on a platform, which are both good use cases. Bitcoin is a good example.
After the merge test went well, ether led a broad rally among digital assets on Thursday. The total value of all cryptocurrencies went up by more than $70 billion in a day, reaching $1.2 trillion. Bitcoin’s price went up by 6% to $24,507, which was its highest level in almost two weeks. Binance’s BNB token went up by 3% to $330.
Still, investors have turned against cryptocurrencies in general after the collapse of the $60 billion stablecoin terra, which sent shockwaves through the crypto market and helped bring down investment firms Celsius, Three Arrows Capital, and Voyager Digital.
Since November, when it was worth more than $3 trillion, the whole crypto market has lost nearly $2 trillion in value.