Ethereum has always been the flagship crypto project because it is more than just a means of payment.
(Photo: imago images/Westend61)
It is the currently defining topic in the crypto world: the update at Ethereum. This should make the blockchain more secure and scalable. Above all, however, the hitherto gigantic waste of energy should be stopped. It’s a huge opportunity for Ethereum. And perhaps the last chance for the crypto world to be more than just a playground for speculators.
The year so far has been bitter for cryptocurrencies. The courses crashed, the market value of all cyber currencies collapsed by more than two thirds at the top. But the loss of trust is even worse, because many things do not work as they should.
An example is the stablecoin Terra USD, which is constantly trading at one dollar and which should form a global payment network. The course collapsed because speculators were able to overturn the algorithm.
The second example offered crypto platform Celsius, which promised its investors double-digit returns. She went bankrupt – the business model only worked when prices rose. The combined damage from the two cases totaled well over $50 billion.
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In addition, there were further bankruptcies and layoffs in crypto projects, as well as hacker attacks, regulatory problems and investigations by authorities. In short: What remained was the image of an industry in which speculators, daydreamers and criminals hung around. And in this mixture comes the Ethereum update.
Ethereum has always been the flagship crypto project because it is more than just a means of payment. The blockchain is the technical basis for numerous crypto applications there. Among them are many from the area of “decentralized finance” (Defi), which is intended to replace banks and stock exchanges.
Ethereum represents all the promises of the crypto world
Among other things, the Defi actors are working on making physical goods such as real estate, cars or art virtually tradable. This is made possible by intelligent, self-executing contracts, on the basis of which companies can theoretically be managed entirely by computer programs at some point. Ethereum stands for all the promises the crypto world started with before it was flooded by speculators who bought coins because they were named after Tesla CEO Elon Musk’s dog.
Experts compare the complexity of the update with switching an airplane’s propulsion system from kerosene to hydrogen – albeit during the flight.
On September 15th, the Ethereum update called “The Merge” will come, which eliminates one of the biggest criticisms of the technology leader. The energy requirement is to be reduced by 99 percent. To put it simply, this is made possible by no longer having many servers compete against each other to confirm transactions, but instead selecting one of the users at random.
This sounds so great that some might ask: Why wasn’t this done sooner? The answer: Because it’s damn complex. Experts compare it to switching from kerosene to hydrogen in an airplane – albeit during the flight. It is not for nothing that the Ethereum organization has been working on this for years.
There is the competing system Cardano, which already uses this technology. But Cardano is only a fraction of the size and importance of Ethereum. That is why the update is also a risk for the entire crypto world.
If the update doesn’t work – although all tests have worked so far – then all the cautious euphoria that has built up over the past few weeks and makes people believe that the crypto world is more than a huge speculation bazaar about it would be gone to push worthless stuff only to sell it to an unsuspecting fool.
Because: If Ethereum can’t do it with its army of developers, who can?
More: Price losses and doubts about the future – What remains of the crypto revolution