Three weeks ago, I mentioned how Ethereum [ETH] — the world’s second-largest cryptocurrency — is preparing for change. If you missed it, you can read all about it right here.
The main point was that after years of waiting and seemingly endless development, Ethereum 2.0 is now actually happening. It’s a major update not just for the crypto platform but potentially for the blockchain technology as a whole.
Known as ‘The Merge’, this update will transition Ethereum from a Proof-of-Work framework to a Proof of Stake. In doing so, the hope is that it will increase transaction speed, reduce gas charges (network fees), and reduce overall energy consumption.
After all, the one thing most people know about Proof of Work is simply how energy-intensive it is.
Critics have even used this fact as a cheap shot to discredit Bitcoin [BTC] in the past. They claim that it requires an ungodly amount of power to keep the blockchain working. But the circumstances aren’t nearly as black and white as that.
Proof of Stake, however, could finally silence these criticisms once and for all. Because while the intricacies of this cryptographic algorithm are still complex, it should completely remove the need for crypto miners.
So, if successful, The Merge may finally pave the way for a new era of crypto.
Hell, it just might be the start of a new era for money as we know it…
A brave new world for all investors
Now, whether you’re a crypto investor or not, everyone should be interested in the rollout of Ethereum 2.0.
For starters, it may finally uncork the bottleneck that has hamstrung crypto for so long. As Wired reports, this new update could finally provide the scale that Ethereum needs to support the mass use of smart contracts:
‘But the Merge will open the door to another process, called “sharding,” which will segment the network into many parallel chains. This, [Justin] Drake says, will unclog the network, which currently supports only about 30 transactions per second and charges users extortionate transaction fees.
‘If everything goes to plan, according to the Ethereum Foundation, a sharded Ethereum should eventually reach a throughput of 100,000 per second.’
If you’re unfamiliar with what a smart contract is, it essentially allows for verifiable transactions or agreements without needing a middleman. In other words, just like Bitcoin has aimed to remove the need for monetary middlemen, smart contracts aim to remove the need for legal oversight in agreements.
For a super-simplified explainer on smart contracts, I suggest you check out this video.
It’ll give you a much quicker overview on this technology than I can convey in words.
The bigger point is that up until now these smart contracts have been limited by blockchain bottlenecks. Ethereum’s merge to this new Proof-of-Stake system will hopefully change that.
With a tentative date set for 19 September, we’re now just one month away from The Merge occurring — a timeline that looks to be all set, with one core developer confirming that all the necessary preparations have been finalised.
It’s an exciting time for crypto believers and a potential turning point for society.
Two sides of the same (future) coin
With all this being said, I’ve no doubt that there will still be sceptics.
You may even be reading this yourself and harbouring some doubts. That’s a pretty natural response to a technology that has promised so much but seemingly delivered little in practical change.
Cryptocurrencies are best known for their speculative gains and losses, not so much real-world disruption. But you must realise that the scope of change they’re aiming for isn’t going to happen overnight.
This is a long and slow-burning revolution.
By the time the change has happened, it won’t even feel like a change at all. Just like other big advancements in the past — like the internet — it will gradually become just another aspect of modern life.
At least, that’s what I expect will happen…
Others, of course, have their own view when it comes to the future of money.
Gold, for instance, has been used similarly to crypto — particularly bitcoin — for centuries. It’s a precious metal immune to the distortions of fiat currency but lacks the digital potential for further evolution.
And while I’m certainly no gold bug, it is clear that gold maximalists share a lot of the same values as the crypto crowd. Please don’t take my word for it, though.
You can get a much better overview of gold’s importance from our in-house gold expert, Brian Chu. After all, today is the last day of his ‘Gold Investor Series 2022’. It’s a comprehensive deep dive into the current gold market and what is yet to come.
And, in today’s keynote event, Brian even gives out a free trade recommendation, including the ticker symbol and buy-up-to price. So it’s definitely worth checking out. You can do so right here.
At the end of the day, whether you care about crypto or gold, they’re practically two sides of the same coin. Both parties clearly don’t believe in a sustainable future for fiat currency.
The only difference is whether you’re betting big on new money or old money. Or maybe even both…
Editor, Money Morning
Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.