What is the ETH Merge, and how might this affect the stock market...
First in order to understand how the ETH merge might affect the stock market, you need to know the basics of the ETH merge and what it means. ETH -> ETH 2.0
The Merge is a long-awaited change to the Ethereum system, moving it from an inefficient proof-of-work protocol to what’s considered a much more efficient proof-of-stake setup. Both are ways to operate the blockchain system that manages and tracks every transaction in the cryptocurrency.
Here are the key differences between the two:
In proof of work, the cryptocurrency relies on “miners” to mine crypto coins by completing complex mathematical calculations using energy-intensive graphics cards.
In proof of stake, the cryptocurrency relies on the owners of the coin, stakeholders, to validate transactions. Stakeholders can earn rewards for doing so.
Analysts agree that there's a non-zero probability that a successful Merge would lead to ETH becoming the no. 1 market capitalization cryptocurrency. This would revolutionize the market and community. Bitcoin is the first and one of the most romantic decentralized money, while ETH is widely adopted by companies developing their blockchain projects, including traditional banks.
Going away from proof of work may reduce the ETHs inflation by diminishing the issuance of the money. Some analysts suggest that the ETH may become deflationary money, which could be a game changer for the ETH price.
Ethereum co-founder Vitalik Buterin points out that the Merge we are waiting for is just 55% of the foreseen upgrade roadmap of upcoming improvements to scalability, utility, and cybersecurity of the network.
Overall, a successful upgrade of ETH would allow a massive potential increase in the price of ETH. This merge is expected to take place September 15-16th, 2022. This would be a massive advance for the entire crypto currency market because there are a lot of big crypto's on the Ethereum Network.
So how will this affect the stock market?
The true answer is no one knows. The stock market recently has had an affect on the crypto market as many of the crypto currencies have been trading "following" the market. Which is interesting, but there is no way to see if a massive increase in the crypto market will change stock market. The most likely outcome is it will have little to no affect on the stock market.
In the next few years it will be interesting to see the potential advancement of crypto currencies and the changes in different industries, payment processors, and other advancements that become of it. That is where the biggest affect on the stock market will take place, which companies advance and adapt and which fall behind.