We are almost there, folks!
As per various estimates, we are less than a week away from the Ethereum merge. This is one of the most important moments in crypto. However, there are many misconceptions out there about the Merge. So, before we debunk these myths, let’s quickly do a recap.
What is the Ethereum Merge?
The Merge is an event where the Ethereum protocol will evolve from its existing proof-of-work (PoW) algorithm to proof-of-stake (PoS).
- PoW is a mechanism wherein miners use their computational power to solve cryptographically hard puzzles and mine blocks.
- PoS makes the mining process completely virtual. Instead of miners, we have validators that lock up a stake in the protocol and bet on blocks. PoS is exponentially greener than PoW since it doesn’t require you to waste real-world energy.
As you can see, this is a huge deal. Unfortunately, however, much misinformation is floating around about the Merge. So today, let’s try to dispel these myths.
Myth #1: The Merge will make Ethereum faster
This is the biggest myth that’s making the rounds right now. No, PoS is not faster than PoW. However, transitioning to PoS does prepare Ethereum for further updates, such as sharding – a powerful layer-1 scalability technique. So, while the Merge will not make Ethereum faster, it will set the stage for future updates.
Myth #2: The Merge will reduce gas fees
No, transitioning to PoS will not make Ethereum cheaper to use. The reason is that Ethereum gas fees are not a function of Ethereum’s technology. Instead, it is a function of the network’s demand.
What does this mean?
Even if Ethereum manages to integrate multiple scaling techniques, if the demand of the network suddenly shoots through the roof, so will the gas fees.
Myth #3: ETH will update to ETH2
No. You will not need to “update” your ETH tokens. If anyone’s telling you to do that, they are probably trying to scam you, or they are misinformed. What could happen is that during the Merge, the Ethereum chain could split into two. But even then, you will not need to update your ETH. Just keep holding your tokens as you usually would.
Myth #4: The Merge will make Ethereum deflationary
In various bullish thesis on the Merge, many have said that Ethereum will become deflationary post the update. The reality is that Ethereum is already deflationary thanks to the EIP-1559 update, which burns a portion of the gas fees. However, PoS will indeed lock away ETH from circulation, making it more deflationary.
Myth #5: The Merge will increase ETH price
The Merge will not magically increase ETH’s price. Of course, ETH could ride a wave of positive sentiment and go up, but that’s just speculation at this point. The ETH price could go up, down, or remain the same post-Merge. It is impossible to predict.
Myth #6: Ethereum will face a downtime
The core developers have already said that Ethereum will not face any downtime during the Merge. So chances are that the upgrade will happen, and you won’t even notice it.
However, do note that CoinSmart will suspend ETH and ERC-20 (LINK, UNI, SHIB, and USDC) deposits and withdrawals during the Merge. Kindly plan accordingly.
Since the Merge is such a big event, many scammers will spread FUD to take advantage of this situation. In cases like these, knowledge is power. So don’t be fooled by overtly flowery rhetoric or baseless rumours.
Do you want to know what happens to Ethereum after the Merge? Read this.