Reporter | Si LinweiOn August 11th, the latest market data showed that the price of Ethereum had exceeded $1900, with a 24-hour increase of over 13%. The total market value of Ethereum has returned to above $220 billion, reaching its highest point since June 6th
Reporter | Si Linwei
On August 11th, the latest market data showed that the price of Ethereum had exceeded $1900, with a 24-hour increase of over 13%. The total market value of Ethereum has returned to above $220 billion, reaching its highest point since June 6th.
The cryptocurrency market has also surged, with the overall market value returning to $1.2 trillion. The price of Bitcoin has exceeded $24500, also reaching its highest point in nearly two months.
In the past four weeks, Ethereum prices have risen by 60%, Bitcoin has risen by 20%, and cryptocurrencies have slowly recovered from the bear market.
As cryptocurrencies move towards a more mainstream market, the macro impact cannot be ignored.
On August 11th local time, the US Department of Labor released data showing that the US PPI (Producer Price Index) increased by 9.8% year-on-year in July, with a previous value of 11.3% and an expected 10.4%; The core PPI of the United States increased by 7.6% year-on-year in July, with a previous value of 8.2% and an expected 7.6%.
The lower than expected inflation data has provided a boost to the capital markets, with some suggesting that the concept of a 50 basis point rate hike by the Federal Reserve in September has greatly increased. After the data was released, both the US stock market and cryptocurrency market performed relatively positively.
Although cryptocurrencies have shown increasing correlation with the US technology sector since 2020, with frequent market trends of both up and down, there have been some noteworthy independent developments in cryptocurrencies recently.
Unlike in the past where Bitcoin was the core driving force, the focus of the market this time is on Ethereum. Data shows that the price rebound of Ethereum in July was 56.69%, while the average rebound of other cryptocurrencies during the same period was about 15%. Ethereum's market performance far surpassed other cryptocurrencies, including Bitcoin.
Ethereum is currently the world's largest blockchain ecosystem, and its token "ETH" is also the world's second largest cryptocurrency. In the cryptocurrency bear market that began in May this year, Ethereum's price fell below the $1000 key level from the $3000 level, reaching a minimum of $880.
And it is expected that on September 19th of this year (not the final date), this world's largest blockchain network will undergo a massive upgrade called "The Merge", which not only affects the encryption market, but also includes the concept debate of blockchain technology development.
Specifically, the biggest change of this upgrade of Ethereum is to turn the previous PoW (proof-of-work mechanism) to PoS (proof of equity mechanism). Both PoW and PoS are consensus algorithm mechanisms for recording data on the blockchain network. Bitcoin implements the PoW mechanism, which requires miners to compete in computing power to obtain bookkeeping rights, thus consuming a large amount of computing resources. PoS, on the other hand, obtains blockchain accounting rights by pledging the number of encrypted assets, consuming less computational resources but making it easier to centralize them.
The essence of consensus algorithm is to find a more suitable solution in the triangle of "performance, security, and decentralization" that blockchain cannot achieve. The upgrade of Ethereum has chosen the PoS mechanism, which will bring significant changes to the issuance method and quantity of Ethereum tokens.
Sun Yulin, a senior researcher at the Ouke Cloud Chain Research Institute, told Interface News that the core of this Ethereum upgrade is the change in consensus algorithms, which is also an important step in subsequent upgrades. However, it cannot solve the high transaction costs that Ethereum networks currently need to crack. In the impossible triangle of blockchain, the performance issues of Ethereum may take some time to improve.
At the same time, once Ethereum switches from PoW mechanism to PoS mechanism, due to changes in consensus algorithms, mining graphics cards previously known as "money printers" will not be able to continue working in the new Ethereum network, thereby achieving economic returns. Therefore, due to the uneven direction of interests, some Ethereum miners have begun to prepare to fork over Ethereum and choose to take another path.
A person close to the cryptocurrency industry told Interface News that due to the previous sharp decline in cryptocurrencies, a large number of graphics card mining machines have been shut down and sold off. Currently, mainstream graphics card prices on e-commerce platforms are close to halving, and the graphics card market has been greatly impacted. And this Ethereum merger and upgrade may also have a certain impact on Ethereum mining companies and mining pools. Once merged and upgraded, for ASIC mining machines, ETC tokens with the same origin as the Ethereum hash algorithm can be selected for mining; For GPU mining machines that are well-known in the market, they can continue to mine other PoW tokens. Additionally, GPUs can provide high-performance computing, rendering, and other services for Web3 middleware protocols.
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