Should you still buy Ethereum? – The colorful fool | Jewelry Dukan

You probably heard that the merge was successful last week. What’s next ether (ETH 3.64%)and how should investors approach the second most valuable cryptocurrency in the world?

First, let’s make one thing clear: the merge is just one step in Ethereum’s evolution. Blockchain is still a work in progress. According to one of its co-founders, Vitalik Buterin, it’s barely halfway done.

At the Ethereum Community Conference in Paris this July, Buterin was asked his thoughts on the future of blockchain. He said that Ethereum would only be 55% complete once the merger was complete and launched. In addition, he discussed future improvements and implementations that will eventually enable Ethereum to process 100,000 transactions per second (tps), orders of magnitude more than the 12 to 20 tps it can handle in its current state.

But to reach this level of speed and capacity, Ethereum needs many more upgrades.

What the merger is not

With any event as significant as the merger, rumor and speculation are bound to circulate. Some of the most common misconceptions have to do with speeds and fees. As Ethereum has become one of the most popular blockchains in recent years, its network is significantly congested. This increased traffic caused speeds to almost grind to a halt and transaction fees to increase significantly.

Ethereum’s goal is to one day eliminate these disadvantages, but that will not happen with the merge. The merger just switched Ethereum from a proof-of-work consensus mechanism to a proof-of-stake mechanism. The only way to optimize speeds and reduce fees is to increase the capacity of the network.

But the importance of the merger should not be underestimated. Now that Ethereum is on Proof of Stake, the foundation has been laid for the blockchain to more easily evolve.

What is the merge

Without the transition to Proof of Stake, Ethereum would have difficulty scaling, a term used to describe a blockchain’s ability to handle more transactions at faster speeds. As mentioned earlier, moving to Proof of Stake Ethereum will not directly make Ethereum faster or increase throughput, but it will ultimately allow the network to increase its scalability.

One of the main ways Ethereum scales is through a method called sharding. This process essentially splits the main Ethereum blockchain into multiple shards. Sharding on a proof-of-work blockchain is not impossible, but it is much more difficult to implement.

Once sharding has started, validators approving transactions only need to process those transactions within their shard rather than the entire blockchain. Think of it like Ethereum going from a two-lane road to a six-lane highway. With sharding, Ethereum’s network will finally increase its capacity, and as a result, fees should come down and speeds should improve.

The plan is for Sharding to go live sometime in 2023. Ethereum’s website states that priority was given to the merge first; Now that this is complete, attention will turn to the implementation of sharding.

The Bigger Picture

Investors should understand that Ethereum is not a finished project. If the blockchain peaked at nearly $4,700 last year while still on proof of work, one could imagine the heights it could reach as developers continue to upgrade.

Luckily for investors, these upgrades won’t happen overnight, reducing the risk of something going massively wrong in a short period of time after the merger. In any case, Ethereum has been notoriously lazy when it comes to deadlines. The Merge was in development for over a couple of years and had a handful of missed deadlines.

Assuming that sharding will also proceed with a lag, investors should take this opportunity to add more Ethereum to their portfolios until the market realizes the appreciation and increases the cryptocurrency. Ethereum is building for the future by ensuring it’s able to support more users with faster speeds and cheaper fees, a great combination for a price boost. Now that it’s hovering around just $1,500 in a bearish crypto market, Ethereum may have a long run ahead of it.

RJ Fulton has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.

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