Reading time: ~2 m
Experts talked about what chances the old version of the Ethereum blockchain can get if there is a bifurcation of the network
The update of the Ethereum blockchain to version 2.0, also known as The Merge, is scheduled for mid-September this year. This update will mean the integration of the Beacon Chain and the main Ethereum network, which now operate separately from each other. The “merger” will end the use of the Proof-of-Work algorithm in Ethereum and begin the era of a new Ethereum technology based on the Proof-of-Stake technology used in the Beacon Chain.
The main difference between the new version of PoS and the old PoW is that to maintain the work of the PoS network, miners are not needed who ensure the security of the system and extract new coins in the current version of the blockchain. The performance of the new network will be provided by holders of digital coins, who receive a reward for this. This process is called staking.
The crypto community suggests that after the Ethereum update in September, a hard fork (bifurcation of the network) may occur. In this case, there will be 2 parallel blockchains, one of which will work on the PoW algorithm, and the second will remain on PoS.
In the event of a bifurcation, each network will have its own version of the Ethereum token. ETHS will represent a version of the new PoS chain, and the ETHW token will represent the PoW chain. Crypto platforms such as Poloniex, MEXC, BitMEX have already announced support for both versions of the network and their tokens if a hard fork happens.
Experts shared with RBC-Crypto their views on the prospects of the PoW version of the Ethereum network, which may arise when updating the blockchain
“Must prove his reliability”
Ethereum miners are currently the only community in whose interest it is for Ethereum to continue to use the PoW consensus mechanism, according to BitCluster investment director Thomas Galovich. According to him, the developers of Ethereum, headed by Vitalik Buterin and Tim Benko, have long decided to implement a consensus PoS architecture.
DEFI, NFT and other L2 protocols (the second level of the blockchain) will begin to use Ethereum 2.0 because of the advanced features that the network update offers, such as increased transaction speed, the expert believes. In addition, Galovich pointed out that exchanges and financial service providers such as Coinbase, Galaxy Digital or Bitcoin Swiss have already voted for PoS, because they were the ones who performed staking for the Beacon chain (a network running on the new algorithm).
Speaking about the prospects of the PoW-version of the network, the expert noted the proven reliability of this option. At the same time, ETH 2.0 still has to prove its reliability, Galovich believes. He also added that the PoW fork could exploit the huge marketing effects that the Ethereum brand has already created, but it’s unclear if it will be able to sustain the success and innovation that Ethereum has had while it was run by the Ethereum Foundation.
The expert recalled that the network already had a fork in 2016, as a result of which Ethereum Classic (ETC) was formed. If the majority of developers and ecosystem participants are switching to ETH 2.0, then it is likely that a possible fork of Ethereum could have the same history as Ethereum Classic, the expert suggested. The UTS project first supported a large mining pool MinerGate, then the altcoin gradually began to add cryptocurrency exchanges: Poloniex, Bitfinex, Kraken and others.
“Interest will decide a lot”
The transition of Ethereum to PoS does not take into account the interests of miners, says maria Stankevich, development director of exmo.com. According to her, it is unlikely that the development team is conducting a dialogue with those participants in the ecosystem who are now engaged in the extraction of cryptocurrency through mining.
The expert noted that due to this state of affairs, there are forecasts that the Ethereum network on PoW has every chance of becoming popular due to the interest of a large number of miners. However, in the future, more and more coin holders will switch to staking, Stankevich believes.
“Much will be decided by the interest that coin holders will receive – if we are talking about 5% per annum, then PoW has every chance of becoming popular, if about 25%, then I think PoS will be chosen by large Ethereum holders who earn on the staking of their coins,” the expert suggested.
#Mining #staking #Experts #assessed #prospects #PoWversion #Ethereum