Why is the ETH merger and upgrade a good thing?

POW consensus mechanism, also known as proof of work, the current mainstream POW mining basically uses computing power to perform hash operation to obtain a hash value that meets the requirements, and the node that first publishes the correct answer obtains the accounting right of the next block (mining is successful), and get the reward and fee income of the block. The higher the computing power, the higher the mining success rate.

The POS consensus mechanism, also called Proof of Stake, does not require a competition of computing power among miners, but is determined by the proportion of stake, that is, the greater the stake (the more ETH pledged), the higher the mining success rate.

In contrast, the advantages of the POS consensus mechanism are:

  1. The energy consumption is greatly reduced, which is more in line with the needs of environmental protection.
  2. The participation threshold is lowered, no additional purchase of mining machines is required, only ETH needs to be purchased.

The selling pressure is reduced:

  1. Participating in mining needs to purchase ETH and pledge it. At present, more than 10% of the ETH in the market has been pledged.
  2. The mining reward is reduced by about 90%, and the inflation rate is reduced. In conjunction with the destruction of ETH, it is easier to achieve deflation.
  3. The operating cost of the mine is reduced, and the pressure to recover the cost by selling mining rewards is reduced.

Although some people think that the security of POS is not as good as that of POW, POS may be a safer choice in terms of ETH. First of all, the cost of attacking is far greater than the profit. The attacker needs to increase the proportion of his own equity to 51% of the total pledged amount. It means a huge investment, and the result of the successful attack is that the price of the currency has shrunk significantly, and the attacker has become the biggest victim. Secondly, given the influence of the ETH core team, even if the attack is successful, there is still a high probability of being rolled back (refer to ETH). And the hard fork of ETC), the token address used for the attack will be blocked, causing massive deflation and causing the price of the currency to skyrocket, but the attacker cannot make a profit.

ETH itself is a digital asset with relatively clear value and good expectations. There are many investors who already hold coins or plan to hold coins. Switching to POS is equivalent to increasing the interest earned by holding coins on the basis of high-quality targets, making ETH more attractive.

Mining also no longer needs to buy a large number of graphics cards and consumes a huge amount of electricity, which also meets the requirements of some institutions for environmental protection, and the potential scale of funds has increased.

The ETH2.0 merger time has been postponed many times, and this time on September 19, there is also the possibility of being pigeons.

The larger the total amount of pledged mining, the lower the unit income, and the currency price is at risk of falling in a bear market. Considering the relationship between mining income and currency price loss, the time for large-scale funds to enter the market may be later.

In the early morning of tomorrow, Tesla will announce its Q2 earnings report, which may affect varieties (BTC, DOGE, SHIB).

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