Ethereum 2.0, which was all set to hit the market is also being postponed to June this year
2022 is the end of the beginning for the cryptocurrency market. For almost three weeks straight, the digital tokens’ price is on a downward trend. Starting from top cryptocurrencies like Bitcoin to the recently trending Shiba Inu, all digital tokens are on a bear run. Unfortunately, Ethereum is no different. But can ETH really afford to stay low now? The answer is ‘No’. Ethereum is all set to enter a new phase with Ethereum 2.0 and other advancements. The cryptocurrency market going through a gloomy period right now might take a toll on ETH’s price and market capitalization.
Ethereum experienced an eventful year in 2021. The digital token even outperformed Bitcoin on growth percentage. In the middle of November, it hit a record high of US$4.843, nearly seven times higher than its price at the start of the year. However, since then, the digital token is going through a gloomy period. ETH’s price even broke through its long stood resistance level of US$4,000 and is currently hitting the rock bottom. But Ethereum didn’t want the year to start like this. They had many amazing plans in the bag and wanted to accomplish all. Some of those amazing ideas like decentralized autonomous organizations (DAOs), decentralized finance, and an improved ecosystem are still on the radar. But it is pretty uncertain whether ETH could achieve the milestone it has set for itself in 2022. With more and more regulations and trends suppressing the cryptocurrency market, Ethereum might have a hard time coming out of confinement.
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Is US$10,000 Still in Radar?
Since the cryptocurrency sphere is extremely volatile, it is uncertain where Ethereum will head. If the acceptance of ETH continues and value surges, even US$100,000 will be an easy target for the digital token. Therefore, extra efforts and massive adoption are needed for Ethereum to break through the US$10,000 mark in 2022.
Earlier predictions of Ethereum are pretty impressive. Goldman Sachs issued an ether price target of US$8,000 by the end of 2021. On the other hand, Standard Chartered has issued a long-term Ethereum projected value target of US$26,000 to US$35,000. While all these numbers seemed to have impressed the old and new investors, Etheruem has gone into an unpredictable phase.
What About the Upgrade and Why is Etheruem 1.0 Failing?
Ethereum blockchain network was created in 2015. Back then, it stood as the most competitive and advanced mechanism that users have ever experienced. Ethereum killers like Solana, Cardano, and Algorand didn’t exist back then, so ETH was a sole player after Bitcoin. Because of this early stage advantage, Etheruem enjoyed massive adoption over time. Unfortunately, 2020 and 2021 have brought more advanced networks into the play. With more choices, ETH has lost its market stance and on the other hand, the new networks have also started to point out the disadvantages of Ethereum.
To begin with, Etheruem’s Proof of Work (PoW) mechanism is very old and failing. Its consensus mechanism is getting outdated according to the emerging trends. Ethereum offers a variety of features like smart contracts, NFTs, and DApps. But the transaction fee for all this is pretty high compared to other networks. Finally, Etheruem doesn’t have a supply limit to trigger inflation. On the other hand, its close competitors like Bitcoin and Cardano have a supply limit of 21,000,000 and 45,000,000,000 respectively.
What is Ethereum 2.0 and Why is it Necessary?
Famous cryptocurrencies like Bitcoin and Etheruem are using the proof of work mechanism to create currencies. According to this method, the miners need to solve a complex math equation to create new coins. However, the solving takes time and consumes a lot of energy. The energy consumption issue has received a lot of criticism from climate activists and global leaders. Therefore, Ethereum is moving to a new mechanism called Proof of Stake (PoS), which demands users to leverage their existing cache of ETH as a means to verify transactions and acquire new tokens. Since it counters the energy consumption issues of the 21st century, the development seems to be a must for the Ethereum network.
The Disappearance of Miners
The Ethereum upgrade is aimed to reduce energy consumption during the mining process. While doing so, mining on the ETH network will become obsolete. For example, miners will get no block subsidies, transaction fees, and Miner Extractable Value (MEV). The revenue from mining will be instead rewarded to investors who contribute to network security to stake their coin holdings. This eventually leads to the disappearance of miners.
On the other hand, even Etheruem 2.0 is not rolled out on time. It was originally planned to hit the market on December 9, 2021. Later, it was announced that the upgrade will take place only in June 2022. Therefore, the delays are further contributing to Etheruem’s value decrease. If the situation continues, ETH will hit major roadblocks on its way soon.