The update of the validation system of Ethereum (ETH), the second most important cryptocurrency in the world With almost US$ 200,000 million in market value, it raises the question about the future of an industry that demonstrates a capacity for permanent evolution and that, at the same time, faces the most adverse macroeconomic scenario in its short history.
In the early hours of last Thursday it was completed “The Merge” -“The Fusion”in English-, an update of the software with which the operations that occur in the Ethereum network are certified. it will demand only 0.05% of the energy that was previously used.
Specifically, Ethereum changed its Proof of Work model -Proof of Work or PoW, in English-, in which thousands of computers compete to solve complicated equations to unlock new digital tokens or validate transactionsto the new Proof of Participation -Proof of Stake or PoS, in English-, from which the users of the ETH blockchain will directly verify the transactions using their existing assets.
“The change from the consensus protocol to PoS can be considered one of the most important events in the crypto ecosystem. Of course, like any event of this level, it brings a lot of speculation about what will happen,” he told Télam Juan José Méndez, CBO of Ripio.
In this sense, a substantial reduction in the energy expenditure that the Ethereum Blockchain will need to function is expected. -It is estimated that it will consume 99.95% less electricity- and greater decentralization, since to be a validator it is only necessary to have 32 ETH to activate your own validator and it will no longer be necessary to have specific hardware as is the case until now with PoW.
The latter allows that, instead of the nearly 8 thousand validators that it had distributed throughout the world, the Ethereum network now has nearly 400 thousand validators, 50 times more decentralization than the system had before. In addition, new updates scheduled for the coming months are expected to allow the network capacity to go from 15 transactions per second to 100 thousand.
“This will be another important change for Ethereum to continue to grow and unlock more use cases and adoption, ceasing to be the largest ecosystem with the greatest amount of value but very limited, and having capacity for all of humanity,” Mendez said.
However, it is not all good news for the crypto world. Having hit a cap of $3 trillion in November 2021, the market lost almost 70% of the money invested since then, to hit $930 billion this weekend. The central element of this fall is the general malaise unleashed in the markets that anticipates a new and strong world crisis.
The escalation of interest rates throughout the world in the face of the highest inflationary spike in decades, the effects on the price of energy and raw materials that the war between Russia and Ukraine has and the new mobility restriction measures in China due to its “Covid 0” policy have put the world in a new recessive scenario after the strong shock caused by the pandemic in 2020 and since 2008 in general.
An important fact to keep in mind is 2008 was the year of the creation of Bitcoin.
“Although Bitcoin is just over ten years old, it has been less than five years since the use of crypto began to grow. We are still in a very early stage of the technology and it is expected that there will be fluctuations in the price,” he told Télam Maximiliano Hinz, director of the Binance firm for Latin America.
In this regard, he assured that “there is still a long way to go and a lot of education”, since “global crypto adoption is between 6 and 8 percent, while, for example, credit cards are at 12 percent.”
“As adoption becomes more massive, I think prices will become more stable,” Hinz said.
To get an idea, during In recent months, the price of Bitcoin (BTC) and most cryptocurrencies has completely collapsed, with falls of up to 95% in some cases, so nothing indicates that in the macro scenario this is the bottom of the market.
Although the so-called “bear market” or bear market is taken as an opportunity for the oldest users of cryptocurrencies to monopolize more projects with greater projection, the high risk and the strong price volatility force us to think very carefully about what capital to invest in this asset class.
“It is necessary to understand that we are in a stage of adoption and it is very important to maintain a long-term vision, take advantage of the cooling of the market to study the projects and rethink the conformation of the crypto portfolio. We must remain calm so as not to make bad decisions, since it is understandable that price drops can generate insecurity, but we must not stop keeping in mind the long-term future scenario once adoption is massive,” said Méndez .
Only 35% of Argentines have confidence in cryptocurrencies
The growing level of adoption of cryptocurrencies as a form of savings or investment in Argentina is faced with high level of disrepute that this technology has, since only 35% of Argentines have “total” or “medium” confidence in this type of asset.
In that sense, 8% of Argentines have or had cryptocurrenciesanother 18.5% said they would like to have digital currencies and 83% know or have heard of cryptocurrencies.
Knowledge and the possibility of adopting this type of asset increases the higher the educational level and the younger the age of the people surveyed in the study. Nevertheless, only 10.8% have “totally or quite a bit of confidence” in these assetswhile another 24.1% have a “medium confidence”.
The data corresponds to a study carried out by Synopsis Consultores in Argentina for the Bitso cryptocurrency platform, aimed at knowing the knowledge, interest and adoption of digital currencies in the country.
The survey specified that 33.6% of those consulted know cryptocurrencies and another 49.4% have heard of them and that the youngest are the most adept at these assets: in the range of 16 to 29 years, 4% had crypto, 13% have today and 34% would like to have, a percentage that is slightly reduced among those between 30 and 49 years.
Crypto adoption also grows along with educational level: 13% of those with tertiary education have or have had these assets, while 22% want to acquire them.
“A couple of years ago it was clear that the cryptocurrency industry belonged mostly to a small sector that understood how it works in order to be able to “invest” skillfully. Today we see that the adoption of crypto is increasingly taking place between a profile of more diverse users and that seeks to attend to different needs, above all to protect their heritage”, highlighted Julián Colombo, Head of Public Policy at Bitso.
