Ethereum’s original ETH coin prices skyrocket as miners migrate before Merge

In the past couple of weeks, Ethereum’s popular ETH coin has jumped nearly half as confidence grows on its long-awaited move, or “Merge,” to a leaner and more efficient blockchain technology called proof of stake.

Yet its earnings pale in comparison to the sudden surge in interest in another long-forgotten alternative since the beginning of Ethereum’s history.

The value of ETC, a kind of illegitimate offspring born in 2016, has tripled over the same period and almost hit a high last time in March, according to data from CoinGecko.

Its price hike really started to take off after Ethereum founder Vitalik Buterin encouraged users and developers last week to migrate back to his original creation if they weren’t convinced 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 an absolutely fine chain.”

ETC is the result of the so-called DAO Hack of the Ethereum Network in which $ 60 million was successfully stolen from a decentralized autonomous organization just a year after the creation of Buterin was first published in July 2015, at the time. a fortune for a nascent cryptocurrency industry.

A vote was held by DAO users responsible for governance decisions, with the majority supporting a “hard fork” in the chain that would restore stolen money to investors.

As 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 from miners, most of whom didn’t have an easy time with the recent ETH crash and now have to actually lose their revenue entirely.

The reason is that Ethereum, the second most popular blockchain after Bitcoin, will no longer require mining services once it switches to faster and more efficient technology as part of the tentatively scheduled union for September 19.

Instead, they will be replaced by the stakers, who will take on their jobs while maintaining the security of their trustless payment network.

Faced with the impending loss of business, the AntPool mining pool pledged to invest $ 10 million on Tuesday to support the further development of Ethereum Classic, which is now independently operated.

Mining vs staking

To understand the difference between miner and staker, it is important to first understand the underlying technology.

Financial transactions typically require a trusted counterparty such as a bank to ensure that both parties to an exchange can fulfill their conclusion of the deal before it cancels the deal and credits or debits an account.

However, cryptocurrency changes hands on a completely permissionless basis. Complete strangers can buy and sell coins using anonymous wallets without fear of being devalued.

This is because an asset like Bitcoin operates using a shared ledger of transactions distributed to all those interested in maintaining the network. Activity is recorded in the form of blocks on a chain with miners paying for freshly minted Bitcoins as an incentive to validate each of these immutable entries.

This majority consensus mechanism is known as proof of work (PoW) and requires an enormous amount of computing power for each miner to keep their copy of the ledger up to date and up to date.

Since the Bitcoin network has prioritized security and decentralization above all, it requires enough electricity to power a small country and can only process transactions at a snail’s pace by today’s standards.

That’s why new types of blockchain technology such as Solana have emerged that take a completely opposite approach, using what’s known as proof of stake (PoS) to improve energy efficiency and scalability to achieve similar speeds to credit card giant Visa. .

Instead of validating transactions by anyone willing to set aside their computing power as a mining platform, people stake a certain amount of their holdings just like they would with a security deposit.

The downside to this solution is that more influence is centralized in the hands of a smaller and select number of people who will benefit from being the only ones who can reap the rewards of blockchain while maintaining the network.

However, there are penalties to ensure that the system is not abused. In the event of an attack, whether intentionally organized or allowed through negligence, their staking cryptocurrencies can be lost in part or in whole.

Ethereum is now in the process of switching from PoW to its so-called Beacon chain currently running in parallel which uses PoS. Validators who want to earn cryptocurrencies must first agree to block 32 ETH, approximately $ 55,000 at current value.

For those miners who are unwilling or unable to do so, they can switch to Ethereum Classic.

“They will definitely welcome proof-of-work fans,” said Buterin.

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