Ethereum, the second-largest cryptocurrency after bitcoin, is on the cusp of a major upgrade that coincides with a potential crypto “black swan” event.
The ethereum price has swung wildly over the last month as traders try to gauge how ethereum’s merge upgrade will affect the market. In recent months, the ethereum price has crashed to under $1,000 per ether, only to rebound to more than $2,000. The ethereum price is currently trading around $1,500. The bitcoin price is meanwhile barely managing to keep its head above water after one crypto exchange chief executive warned “anything could happen” during the bitter crypto winter.
Now, ethereum cofounder and the project’s spiritual leader Vitalik Buterin has warned users to update their ethereum clients before the beacon chain hard fork begins early next week.
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“Reminder: even though the merge is coming around September 10-September 20, the beacon chain hard fork is on September 6,” Buterin posted to Twitter. “Make sure to update your clients before then!”
The so-called bellatrix upgrade will kick off ethereum’s merge and will activate on Monday next week. The ethereum mainnet merge is then scheduled to begin between September 10 and September 20.
Buterin, who made a surprising ethereum price prediction in July, also linked to an Ethereum Foundation blog post that warned ethereum clients Erigon and geth need to be updated urgently as the long-awaited merge upgrade approaches. Ethereum clients allow ethereum nodes to read blocks on the blockchain and view transaction, mining and smart contract interfaces.
“Warning: Erigon version v2022.08.03-alpha contains an important fix to block production and a number of other minor patches,” said the post, written by the Ethereum Foundation’s protocol support team. “All Erigon users are recommended to upgrade to this or a later version prior to the merge. geth version v1.10.22 contains a critical database issue, do not use this version, and if you have already upgraded, please upgrade to v1.10.23 as soon as possible.”
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Ethereum’s radical merge upgrade, which has been in the works for years, will see the network switch from bitcoin’s proof-of-work consensus mechanism to the more power-efficient proof-of-stake, allowing ethereum holders to “stake” their ether to secure the network in return for freshly-minted coins. The switch to proof-of-stake is expected to reduce ethereum’s carbon emissions by 99%, according to the Ethereum Foundation.
Ethereum rivals such as Binance’s BNB
Meanwhile, it’s been predicted staking will have a deflationary effect on the ethereum as people lock up their coins, suppressing supply as demand increases. Ethereum began to become deflationary last year, with more coins being “burnt” than were distributed to so-called miners who verify transactions on the blockchain.
“Around the merge we can expect increased volatility on the ethereum price, however, ethereum prices should be positively influenced overall in the long term due to ethereum capacity to change,” Max Kordek, the chief executive of blockchain application platform Lisk, wrote in emailed comments.