26Ethereum's Next Big Upgrade and What it Really Means

Crypto Weekly

Despite reports that the world's most popular blockchain is in the midst of a massive upgrade that will change its infrastructure and make it more energy-efficient, some misconceptions are circulating that investors should be aware of.

With the "merge," Ethereum plans to move from a proof-of-work to a proof-of-stake model (more on that later). By merging, Ethereum will become more scalable, secure, and sustainable. Crypto mining for Ethereum will become obsolete, reducing its environmental impact; the supply of Ether will decline as fewer coins are issued; blockchain security against potential attacks should improve; and institutional investment in Ethereum will grow.

'New' Ethereum tokens won't be created by the merge

Following the merge, there is a big misconception that Ethereum will have a "new" token. According to Ethereum developer Tim Beiko, this is not true. There will be no change to Ethereum's cryptocurrency, Ether (ETH) Ethereum 2.0 was once referred to as "Ethereum 2." However, the Ethereum Foundation and the blockchain's core developers announced in January that this labeling would be phased out, as scammers had been trying to convince users that a new "Eth2" token would replace ETH.

The Ethereum Foundation reported that malicious actors have tried to trick users into exchanging their ETH for "ETH2" tokens or that they must migrate their ETH before the upgrade by using the Eth2 misnomer. Beiko suggests investors remain wary of any promises of free tokens or airdrops relating to the merger from outsiders.

Ethereum's fees will not be lowered by the merger

The merger will lower Ethereum's "gas fees," or transaction fees, is another misconception. According to Beiko, this is also incorrect.

As a result of the merge, Ethereum will shift from a proof-of-work model to a proof-ofstake model. To validate transactions and create new coins, Ethereum is currently based on what is known as proof-of-work, which requires miners to solve complex puzzles. Computer power is required for this process, and it is often criticized for its environmental impact.

With the planned upgrade, Ethereum will switch to proof-of-stake, which would allow users to validate transactions according to how many coins they stake. For the validation of transactions on the network, users can earn rewards by staking more coins.

Ethereum will undergo a proof-of-stake transition as a result of the Merge, according to David Lawant, director of research at Bitwise Asset Management. A crypto network must decide how it decides who gets to propose new blocks of transactions that will be validated and added to the blockchain by all participants.

Ethereum currently has both a proof-ofwork and a proof-of-stake chain running at the same time. The proof-of-work chain is currently the only one that processes transactions for users. Both chains have validators. Upon completion of the merge, Ethereum's blockchain will switch to the Beacon Chain, a proof-of-stake chain, and mining will become obsolete.

Depending on how crowded a network is, this structure change might cause the price of "gas fees" to decrease, as these fees can sometimes add hundreds of dollars to the cost of processing Ether transactions. However, Beiko said, that's not going to happen. 

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Can Anyone Just Live Off BITCOIN?

Would you be able to live on Bitcoin alone in London? Imagine living in London, the UK capital, and paying for travel goods and services only with the world's most influential cryptocurrency. During this crypto-experiment, Brian McGleenon encountered obstacles such as slow transaction speeds and the low adoption rate of cryptocurrencies by businesses and retail outlets in London.

On a foggy Monday morning in December, Brian said, "I decided to live solely on Bitcoin (BTC-USD) for 24 hours. Because I would only need my mobile phone and a set of cryptocurrency-specific payment apps to carry out this experiment, I did not carry any credit cards or cash in my wallet."

Now that Bitcoin is the world's most popular cryptocurrency, buying it has become easier than it used to be. Purchasing Bitcoin on exchanges, such as Mt. Gox in Japan, required users to move funds through a maze of offshore intermediaries. Retailers can now access Bitcoin using applications such as Revolut, Paypal (PYPL), and Coinbase (COIN) in a matter of seconds. Brian continued, "For my London trip, I deposited $150 (£110), about 0.004 BTC, of Bitcoins into my Revolut account at mid-December 2021 prices. As part of my mission, I used Bitcoin only to purchase food, travel, and pay for any needed services. First, I attempted to purchase breakfast in Sainsbury's before departing for London.

I used the Bitrefill app to top up my cryptocurrency wallet with Bitcoin from my Revolut cryptocurrency wallet and purchased $10 worth of Bitcoin, or 0.00028 BTC, for breakfast ingredients. There is a way to purchase gift cards in Bitcoin by using the Bitrefill app, even though most UK supermarket chains do not support Bitcoin."

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“The optician was my next stop. Despite searching the internet for an optician in London who would accept the world's largest cryptocurrency, I was unable to find one. Therefore, I reached out to Stefania Barbaglio, founder of the Financial Fox YouTube channel and one of London's crypto-experts. Located near the Chalk Farm tube station in London, Adam Simmons Opticians accepts Bitcoin as payment for goods and services.

In order to get there, I needed transportation. I discovered that I could not use my car to get around London as no filling stations were willing to compromise the primacy of the petro-dollar and accept Bitcoin as payment for fuel. The Bitcoin Black Cab is the only London taxi service that accepts Bitcoin for payment. I found Crypto Cabbie, who operates the Bitcoin Black Cab service under the pseudonymous Dave Jenkins, after scouring online forums.

It is a one-man operation that has been running since 2017. I spent 0.00056 BTC (or £20) at Adam Simmonds opticians. 0.0021 Bitcoins were paid for the service, which cost £75. A Bitcoin sign hangs outside Adam Simmonds' shop, and all the products there can be ordered using this currency, including eye tests, for which I had already made a reservation.”

During the last six months, Adam has accepted Bitcoin as payment. "I wanted to be part of this new wave of forward thinkers," he said of becoming Bitcoin-friendly. “Since he is a hodler - someone who believes crypto will appreciate significantly over the longterm - he does not cash out the Bitcoins he receives immediately."

“My Revolut transaction took nearly 30 minutes to complete, which was a problem since I didn't want to leave before making sure the payment had gone through, and I was also worried that it would affect my second taxi trip with Crypto Cabbie. My antiquated phone did not cause the transaction delay. After the payment went through, I had $45, or 0.0012 BTC, in my wallet. During my visit to Adam's opticians, a cryptocurrency investor mentioned a pizzeria nearby that accepted Bitcoin.

I was taken to the Cinquecento Neapolitan Pizzeria on Portobello Road by that investor, who chose to remain anonymous. I met Emanuele Tagliarina there and enjoyed a pizza that cost £12, or 0.00034 Bitcoin.

In the aftermath of leaving the pizzeria, I had to travel across London to meet Brian Rose, the host of the London Real YouTube channel, who I wanted to talk to about Bitcoins as a means of everyday transactions. Again, I contacted Dave Jenkins, the Crypto Cabbie, who took me to Old Street for a further £20, or 0.00056 BTC.

In addition to the low adoption rate, Brian and I discussed the slow transaction speeds I had experienced when using Bitcoin in London. Several of the companies that claimed to accept Bitcoin on the internet refused to accept it when I called to doublecheck. I was told that Bitcoin was a great digital asset, but a terrible currency by an ex-Wall Street veteran.”

"It is designed to store value as digital property, but not to be used by people for transactions. We will need new innovations for Bitcoin to be used properly in 12 months." “When I returned home, I still had £14 left in my digital wallet that I transferred to Bitrefill to pay for a takeaway that I ordered through Just Eat.

Bitcoin has the largest market capitalization of all cryptocurrencies. During the financial crisis of 2008, Bitcoin was created. Satoshi Nakamoto, the anonymous founder of Bitcoin, referred to the bailout of global banking in the first block of the Bitcoin blockchain, now called the "Genesis Block." The Genesis Block code contains a secret message which reads "the Times 03/ Jan/2009 Chancellor on brink of second bailout for banks." Bitcoin's consistent value appreciation has been largely unaffected by the fallout from COVID-19 lockdowns throughout 2021. Since the beginning of January 2021, Bitcoin's price has risen by 94.29%, despite a dip in early June.

“My Bitcoin experiment was conducted during a week in which the price of the digital currency fell to a monthly low of $47,000. As a result of the collapse in Bitcoin's price, which reached a record high of over $69,000 earlier in November, the collapse was made all the more dramatic. In my experience living in London using Bitcoin, I found three key conclusions - the transaction speed is slow, Bitcoin is not suited for transactions at scale, and the adoption rate by retail outlets across the capital has not grown significantly since its creation in 2009.”

Bitcoin is still largely unaccepted as a form of payment by retail outlets. Thus, the only way to live exclusively on crypto is through third-party applications such as Bitrefill. Brian Rose says, “Bitcoin is not built for people to transact with on a daily basis, but to store value as digital property.” 