With so many people investing in ETH right now, it’s no wonder why they’re excited about the upcoming Merge.
There are three scenarios regarding the future of Ethereum after the merge: A baseline scenario, a best-case scenario, and a worst-case scenario. Each of these represents potential paths for Ethereum after the merger.
The baseline scenario assumes the Merge happens as planned, on the promised date of Sept. 19th. According to everything we’ve heard, this seems highly likely; right now, there is the mainnet (proof-of-work) chain and the beacon chain (proof-of-stake), and they will merge on Sept. 19th, and Ethereum will become the proof-of-stake blockchain. At that time, the Ethereum blockchain will become much faster, more scalable, more efficient, and better. Investors are so excited about the Merge: It is a technological tour-de-force.
Investors will likely “sell the rumor, buy the news” (short Ethereum before the merge). In other words, they’ll sell ETH heading into the Merge, take their profits once the price increases, and then begin buying back in again once the Merge occurs. This is exactly what happens in the stock markets all the time when investors anticipate major announcements and events. And it’s especially likely if people start talking about how brand-new proof-based consensus protocol is having trouble. After all, Ethereum won’t be finished yet at the time of the merger. As Ethereum co-creator Vitalik Buterin said, Ethereum will only “be 55 percent done.” There will still be much more work, including a projected month-long clean-up phase.
If everything goes according to plan, the merge will happen exactly when promised and on schedule, and there won’t be any problems migrating to Proof of Stake. During the transition, the technology upgrade will probably win praise from cryptocurrency critics, who’ve complained for years that blockchains suffer from problems related to throughput, transaction fees, and general efficiency.
Key Data Points
The good news is Vitalik Buterin appears to be preparing the world for this best-case scenario. At the recent Ethereum developers conference in Paris, Buterin announced that the merge would be followed by the surge, vergesplurge, purge, and splurge. For example, Ethereum value would surge as radically scalable solutions become available for the blockchain. During the vergesplurge and purge that even more efficiency would become available. And finally, the splurge? Well, that’s for the other fun stuff. It all sounds very exciting, and if these four pick up traction with investors, it could propel eth to a new round of record highs.
The worst-case scenario is the scenario that no one wants to consider. When under time pressure to merge two separate chains into one, Ethereum developers somehow mess things up, causing all kinds of technical issues, including competing blockchains and missed blocks. This will result in a prolonged delay of the merger and a steep drop in the value of ETH. Investors may then sell off their ETH, looking for alternative investments on rival Layer 1 blockchains like Solana (CRYPTHOX: SOL) or Avalanche(CRYPTOCURRENCY: AVAX), where they can trade without fear of losing their money.
Which scenario will prevail?
Hope for the best, and plan to be prepared for anything. You can’t predict the future, so don’t assume things will go perfectly. Be ready for any scenario.