Is an Ethereum Chain split possible? How will it impact Ethereum's price?
Ethereum miners generated around $19 billion in revenue last year through the proof-of-work (PoW) algorithm. However, this income stream is at risk as Ethereum is planning to transition to a proof-of-stake (PoS) blockchain. The ''Merge Upgrade,'' set to take place in September, will enable this change. Under a PoS system, miners will no longer be rewarded for verifying transactions on the network. Instead, they will simply receive a share of the transaction fees proportional to their stake in the network. As a result, ETH miners may see their revenue streams dwindle after the transition to PoS.
Some miners may choose to continue mining on the old Ethereum PoW chain after a hard fork chain split, rather than upgrading to the new PoS chain. This could create two parallel blockchains - ETH1 (PoW) and ETH2 (PoS). A recent crypto hedge fund Galois Capital survey found that 33.1% of respondents believe this would happen. However, most respondents (53.7%) believe that Ethereum will have a seamless transition from PoW to PoS.
Some say that the upcoming ETH1 hard fork is unnecessary because Ethereum Classic (ETC) already exists as a PoW chain. They argue that creating another PoW chain (ETH1) would be illogical and wouldn't serve much purpose.
Contentious hard forks are not without precedent. The current Ethereum chain came about as a result of a controversial hard fork in 2016 that reversed a $60 million exploit. This resulted in a split between Ethereum and Ethereum Classic (ETC). So the debate over ETH1 versus ETC is really just a continuation of the original Ethereum fork. Ultimately, it's up to the community to decide which chain they want to support.
Many people on Reddit believe that ETH1 will fail for a variety of reasons, including lack of user adoption, the collapse of the decentralized finance sector, and traders dumping ETH1 tokens to stake more ETH. In a survey by Galois Capital, most respondents also said that exchanges and projects would support ETH2 (PoS) over ETH1 (PoW) in the event of a hard fork.
How does it affect Ethereum Classic?
The hash rate of the Ethereum network has been on a downtrend since reaching a record high in May 2022. This suggests that miners are either taking breaks or shutting down their rigs in the weeks prior to the Merge. It's possible that instead of leaving the Ethereum network, these miners are becoming stakers on the Ethereum PoS chain. This would explain the recent increase in GPU sales in the secondary market, as demand for GPUs has decreased. Therefore, it is likely that people will sell their ETC after the Merge happens since the value may go down.
Ethereum Price Prediction
Some experts are predicting that 2022 will be a crucial year for Ethereum, as its price could potentially double or even quadruple following the merge. This would be a major increase from its current value, making it an enticing investment for many. However, there is also the potential for the price to drop significantly, so potential investors should be aware of the risks involved. A major determining factor in Ethereum's future success will be how it performs after the Merge upgrade.
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