Original Ethereum Coin ETH Prices Soar as Miners Migrate Ahead of Merge
In the past two weeks, Ethereum’s popular ETH coin has surged nearly by half as confidence builds around its much-anticipated switch, or “Merge,” to a leaner and more efficient blockchain technology called proof. of attendance.
Yet its gains pale in comparison to the sudden surge of interest in another long-forgotten alternative from the very beginning of Ethereum’s history.
The value of ETC, a sort of illegitimate offspring born in 2016, has tripled in the same period and nearly reached the highs last seen in March, according to data from CoinGecko.
Its price surge really started to take off after Vitalik Buterin, the founder of Ethereum, last week encouraged users and developers to revert to his original creation if they were unconvinced by the upcoming merger.
“It’s a very welcoming community,” Buterin said at the Paris conference. “If you like proof of work, you should use Ethereum Classic, it’s a pretty thin chain.”
ETC is the result of the so-called Ethereum network DAO Hack in which $60 million was successfully stolen from a decentralized autonomous organization just one year after Buterin’s creation went live in July 2015, at the time a fortune for a fledgling crypto industry.
A vote was held by DAO users responsible for governance decisions, with a majority backing an on-chain “hard fork” that would return investors their stolen money.
Since the decision was highly controversial, another part of the community refused to play along and instead continued with the original chain, known as Ethereum Classic, and its native currency, ETC.
Buterin’s comments helped rekindle interest in the ETC cryptocurrency among miners, most of whom have not had it easy with the recent collapse of ETH and are now facing complete loss of income. .
The reason for this is that Ethereum, the second most popular blockchain after Bitcoin, will no longer need mining services once it switches to faster and more efficient technology as part of the merger tentatively planned for September 19.
Instead, the replacements will be stakers, who will take on their job of maintaining the security of its trustless payment network.
Faced with the impending loss of business, mining pool AntPool pledged to invest $10 million on Tuesday to support the development of Ethereum Classic, which is now independently managed.
Mining vs Staking
To understand the difference between miners and stakers, it is important to first understand the underlying technology.
Normally, financial transactions require a trusted counterparty such as a bank to ensure that both parties to an exchange can fulfill their end of the deal before it clears the transaction and credits or debits a account.
However, cryptocurrency changes hands on an entirely permissionless basis. Complete strangers can buy and sell coins using anonymous wallets without fear of harm.
This is because an asset like Bitcoin operates using a shared ledger of transactions distributed to everyone interested in maintaining the network. Business is registered as blocks on a chain with newly minted Bitcoin paid miners as an incentive to validate each of these immutable entries.
This majority consensus mechanism is known as proof-of-work (PoW), and it requires enormous computing power for each miner to keep their copy of the ledger always fresh and up-to-date.
Because Bitcoin’s network prioritizes security and decentralization above all else, it requires enough electricity to power a small country and can only process transactions at a snail’s speed by today’s standards.
That’s why new types of blockchain technology have emerged, such as Solana, which takes a completely opposite approach, using what’s known as Proof-of-Stake (PoS) to improve energy efficiency and scalability in order to achieve speeds similar to credit card giant Visa.
Instead of transactions being validated by anyone willing to put aside their computing power as a mining rig, people stake a certain amount of their own assets as they would a security deposit.
The downside of this solution is that more influence is centralized in the hands of a small and restricted number of people who stand to gain from being the only ones who can reap the benefits of blockchain by maintaining the network.
There are, however, penalties to ensure that the system is not abused. In the event of an attack, whether intentionally organized or negligently authorized, their staked crypto can be confiscated in part or in whole.
Ethereum is currently transitioning from PoW to its so-called Beacon chain currently running in parallel and using PoS. Validators who wish to earn crypto must first agree to lock 32 ETH, or approximately $55,000 at current value.
For miners who are unwilling or unable to do so, they can upgrade to Ethereum Classic.
“They will definitely welcome proof-of-work fans,” Buterin said.
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