Will Ethereum 2.0 Save Crypto?

On May 11th, 2021, Ethereum (ETH) broke $4K for the first time, only to fall under $2K this week. Bitcoin (BTC) opened at $56K that morning and is under $32K today. Dogecoin (DOGE) peaked at $0.69 just a few days earlier and opened at $0.18 this morning.

That said, don’t count crypto out just yet. What we experienced in the past few years was proof of concept. Cryptocurrency is a viable medium of exchange. Blockchain is the technology of the future. The vulnerability with crypto is mining, which is where opposition is mounting.

Ethereum Offers a Solution to the Problem

Innovation is born out of necessity. When China cracked down on Bitcoin and Ether mining in June, the crypto market went into freefall. Combined with bans in Turkey, legislation in India, and a call from US lawmakers to regulate mining, it was clear that something had to change.

Enter Ethereum 2.0. The change in the ether system will award block validators based on the amount of capital they are willing to work with. It’s proof of stake (PoS) instead of proof of work (PoW), meaning that ether tokens will no longer need to be mined.

For those new to the topic, this is a big deal because two of the biggest issues with crypto mining are power consumption and environmental impact. PoS systems are more energy efficient, so the impact on the environment is minimized. At least, that’s the theory.

Ethereum Miners May Move to Altcoins

Many of my peers still scoff at the idea of relying on conditional statements to predict market movement, but I use them all the time. Let’s start with the hypothesis that a majority of ether miners will switch to altcoin mining when Ethereum 2.0 goes live. What happens then?

It’s a strong theory. Most ether miners are using GPU units. Bitcoin miners use ASICs. The two are not compatible, so ether miners can’t go in that direction. They can, however, mine RavenCoin (RVN), LiteCoin (LTC), Dogecoin (DOGE), and Ethereum Classic (ETC).

If this goes down like most are predicting it will, there should be a short-term boost in the altcoin market when Ethereum 2.0 goes fully live. That’s supposed to happen in October of this year. Ethereum may experience a slight drop at that time. Buy it when it bottoms out.

Daily Double: Ethereum and Ethereum Classic

I’m writing this on a Friday afternoon after a long week of brutally hot temperatures and torrential rainfall, so I’m going to keep my recommendations short. Buy Ethereum (ETH). It’s cheap today and will be cheaper in October. You’ll reap the rewards in 2022.

This could be a major technology shift in the DeFi world. I believe that crypto without mining is a breakthrough that all cryptocurrencies will eventually follow suit on. It will stabilize values and enhance the security of the blockchain with further decentralization.

My second recommendation is Ethereum Classic (ETC), which is a minable altcoin, not the same as Ethereum itself. When the mining migration happens with the launch of 2.0, I expect there to be incentives in place for ether miners to start mining Ethereum Classic.

Like crypto itself, this is all purely speculative. The one irrefutable fact in this scenario is that Ethereum 2.0 is coming this year. It will change how crypto technology works and put current ether miners out of work. Buy ETH and ETC if you want to cash in on that.

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About the Author

Will Ethereum 2.0 Save Crypto?

Kevin Flynn

A former financial professional and founder of AdvisorScale Financial Writing, Kevin lives in Leominster, Massachusetts with his wife Evelyn, two cats, and nine wonderful grandchildren.