While Bitcoin is still the top dog in the crypto universe, everyone has been talking about Ethereum this week. That’s because the world’s second largest blockchain network by market cap completed its move to a proof-of-stake (PoS) consensus mechanism earlier this week. This has been in refer to as the biggest change to a crypto network since the introduction of SegWit to Bitcoin, which paved the way for the development of Lightning Network.
Nearly all of the attention has been on Ethereum this week, but The Merge wasn’t the only activity taking place in the cryptosphere. MicroStrategy’s Michael Saylor is back to his old ways and plans to sell $500 million worth of stock in an effort to raise more funds for the purchase of more bitcoin. Additionally, Canada’s Prime Minister threw crypto under the bus while attacking one of his key political opponents. Let’s take a closer look at this week’s top stories in crypto.
Ethereum’s switch from proof-of-work (PoW) to PoS is a change roughly eight years in the making, and it finally happened on Wednesday night. The developers behind Ethereum have intended to make the switch to PoS since before the network had even launched, and the traditional miners who had their equipment pointed at that particular blockchain always knew this day would come.
The change may have lower the Ethereum network’s use of energy by more than 99.9%, and estimates say global energy usage will decline by 0.2% because of this protocol alteration. At least one environmentalist group has applauded the move, while also taking the opportunity to request Bitcoin makes the same switch to PoS. That said, Bitcoin is an extremely decentral network where nobody is in control of these sorts of decisions, so implementing such a change is unlikely to ever take place.
There were predictions that a PoW-base Ethereum chain would continue and prosper after the Merge had been in activation. However, the original chain does not appear to have much support in the hours after the switch. That said, Ethereum Classic has seen a rapid rise in both hashing power and price around The Merge. As a reminder, Ethereum Classic is a fork of Ethereum. One that split off in protest of the return of funds. This is from The DAO Hacker to victims of the hack via a hard fork back in 2016.
The Ethereum Classic community has long intended to continue with PoW rather than switching to PoS. The Merge also involves a 90% reduction in the rate at which newly create ETH is issue on the network. However, the ETH price was down roughly 8% in the hours after The Merge.
A few years ago, MicroStrategy was a tech stock that didn’t gain much attention in the media. However, that all changed when then-CEO Michael Saylor began purchasing bitcoin for the company to hold as a reserve asset in late 2020. These days, MicroStrategy is effectively a Bitcoin vault that is trade as a public company. For many, it’s the best and most convenient way to gain exposure to the bitcoin asset. And now, the company is selling $500 million worth of its own stock to fund more purchases of the crypto asset.
The company already holds more than $2 billion worth of Bitcoin. It appears they’re going to buy as much as possible to hold for the long term. There have been recent changes being made over in Ethereum. However, there are still no signs that Saylor or MicroStrategy itself see any value in crypto assets other than bitcoin.
Bitcoin is increasingly becoming a left vs right issue. Those on the right side of the political spectrum tend to see value. Value in a new, digital asset that is unaffiliated with all governments, the left tend to criticize Bitcoin from a variety of different angles. For example, many political leaders on the left side of politics have complained about the amount of energy that goes into the bitcoin mining process. Obviously, this criticism no longer applies to the newly PoS-based Ethereum.
However, that didn’t stop Canadian Prime Minister Justin Trudeau from making a blanket anti-crypto statement. It was an attempt to discredit one of his main political opponents. Conservative Party Leader Pierre Poilievre has made positive statements about Bitcoin in the past. Also, in reference to those comments, Trudeau recently stated, “Telling people they can opt out of inflation by investing in cryptocurrencies is not responsible leadership.”
Going forward, it will be interesting to see if the crypto debate continues to develop. Develop as a right vs left issue. Strangely enough, the crypto skeptics appeared to be aligned with those who are adamant. Especially about the need for a wide variety of blockchain technologies on the left side of the political aisle. Meanwhile, most of the Bitcoin maximalists appear to lean to the conservative right. The makes sense due to the crypto network’s slow and steady approach to the development process.
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