After Ethereum Merge, What’s Next for Bitcoin?

What is the Ethereum merge?

On September 15, Ethereum moved its blockchain validation system from proof-of-work to proof-of-stake.

Alex Tapscott, managing director at Ninepoint Partners, told the Investing News Network (INN) that the team behind Ethereum decided to make the change to the network's consensus mechanism because of the intensive computer power required by proof-of-work. In contrast, the proof-of-stake process requires comparatively little energy.

“It's roughly the equivalent of swapping out the engines of a jetliner traveling at 700 miles an hour across the Atlantic for electric motors (that don't) disrupt the in-flight entertainment system or the drink cart," he said.

The merge brought the Ethereum mainnet together with the Beacon Chain, a proof-of-stake version of Ethereum had already been running for over a year. This update means Ethereum now runs more efficiently.

“Proof-of-stake … was a very important thing that was discussed since the very beginning and now it's being carried out. … It's been a long time coming,” Anthony Di Iorio, co-founder of Ethereum, told CoinDesk.

How will the Ethereum merge affect Bitcoin?

The Ethereum merge has opened the doors to thinking about cryptocurrencies and blockchain opportunities in a different way.

Experts have told INN a change in narrative is much needed, particularly in light of the incredibly difficult and high-pressure year the blockchain sector has had in 2022 as cryptocurrency prices disappoint and sentiment fades.

Overall there's a sense that the energy-saving benefits of the Ethereum merge will attract more mature investors, including larger institutional players, and may even give Ether an edge over Bitcoin.

Gareth Soloway, chief market strategist at InTheMoneyStocks.com, hinted to INN about an overall change in mindset for mature and environmentally conscious investors who may have avoided the blockchain market before.

But could the Ethereum merge actually cause a change in the way Bitcoin operates?

“I think generally within the community, there's a lot of concerns about the environmental case,” Greg Taylor, chief investment officer at Purpose Investments, recently told INN. “Bitcoin itself still uses a lot of power. And who knows — down the road, maybe they'll be tempted to do something like this too. But that's not being contemplated yet.”

However, he added, “There's definitely people watching to see if it can be done on other networks."