After a long wait, Ethereum 2.0 is finally here and the hype is contagious. It's no surprise, considering Ethereum's position as the second largest cryptocurrency as ranked by market value.

In an update known as ”the Merge”, Ethereum gave the crypto space an answer to the buzzing Ethereum merge date question on the 15th of September, 2022. And it's been a noteworthy journey ever since.

If you were too busy to follow the trend, catch up on the major bits in this article.

What Is The Ethereum Merge All About?

The Merge involves the transition of the Ethereum blockchain from the “proof-of-work” consensus mechanism to the consensus mechanism we know as “proof-of-stake”.

This move is an idea that has been in the works since the conception of Ethereum. But it did not meet much reception due to the complex technical effort this transition consists of.

Why Change Consensus Mechanisms?

This change will see Ethereum energy consumption drastically reduced by 99.95%. This means it will now operate on a more energy-efficient system, as opposed to its previous system of proof-of-work that involved computers verifying complex mathematical computations which are also known as 'mining'.

The more efficient proof-of-stake system involves the use of financial incentives and penalties to achieve the same results of verifying blocks of transactions. With this method, users are enabled to be personally involved in the verification process with their cryptocurrency through a procedure referred to as ‘staking’.

The Implications Of The Ethereum Merge

The merge is a long-awaited development that had 41,000 people attend an "Ethereum Mainnet Merge Viewing Party” on YouTube. This project has been undergoing tests for the past two years on a blockchain known as Beacon Chain, which was running alongside Ethereum’s initial Mainnet network and has been undergoing development for not more than six years.

With this development, Ethereum is fast underway to becoming a deflationary asset such that it will protect the money invested by users from inflation. What does this mean for user wallets?

Users' wallets will work as they did pre-merger. However, foreseeing a possible ploy by scammers who might ask users to undertake a wallet upgrade that accommodates there, users have been warned to avoid such suggestions.

Users that have staked their Ethereum will not have their balances unlocked immediately after the merge and would also be unable to trade or transfer their staked Ethereum till when the Ethereum protocol has finalized its upgrades.
While all of this is good news for the crypto space, especially the energy efficiency of the new Ethereum consensus mechanism, it does come with its downsides.

One major flipside would be the concern of centralization of the Staked Ethereum. It has been debated that this new consensus mechanism resembles a "rich get richer" scheme as it encourages a minority group of wealthy persons to control the majority stake in the cryptocurrency as well as have an advantaged influence over the network to the detriment of other users who are not able to afford the stakes and who run the risk of being priced out.

As it stands, Coinbase, Binance, and Kraken, three major cryptocurrency exchanges, own 30% of the network's stake amongst other major players who own substantial amounts of the network's stakes, therefore, the issue of deconcentrating the Ethereum network and removing control from the hands of a few mining syndicates do not rule out the option that they will be replaced by new power brokers.

There is also a concern about the legal uncertainty that thimergerge brings to Ethereum, especially since it has been trying to make a case that Ethereum is a digital commodity and not securities that fall under the jurisdiction of the Securities and Exchange Commission, but the proof-of-stake consensus mechanism makes a point for the SEC's case that, Ethereum is a securities and not a commodity.

Ethereum Merge Price Prediction

Are we going bullish? Let's find out! From the co-founder of Ethereum, Vitalik Buterin, there has been a lot of optimism about The Merge. At the recent Ethereum Community Conference announcement in Paris, the young billionaire stated that four more upgrades will follow the Ethereum Merge.

The result of this will be a radical increase in the value of Ethereum as the Ethereum blockchain receives new scalability solutions.

Because The Ethereum Meger happened at the perfect time with zero technical issues in migrating to a full PoS blockchain, the price of ETH is predicted to go bullish in no time.

We can expect investors to flood the horizon once the good news about Ethereum's progress with future upgrades spreads even further. These upgrades are:

• The Surge
• The Verge
• The Purge
• The Splurge

With more certainty around The Merge, ETH is bound to see a fresh wave of all-time highs. More Ether staked means an increased demand for Ethereum blocks. These two factors play a role in how deflationary Ethereum will be.

Now while Ether will most likely not stay deflationary for long, experts predict that The Merge will realistically see 90% disinflation.

Conclusion

The Ethereum merge is indeed a solution to a pressing world problem, which is climate change, but the economic challenges remain and seem to have been intensified with the transition to the proof-of-stake consensus mechanism.

It is hoped that these challenges can be addressed as the network continue developing.