Should We See Unexpected Forks?
Here’s why Ethereum (ETH) Merge is risky event for ETH holders, stakers and stablecoin owners
Crypto observer Jack Niewold, founder of the Crypto Pragmatist newsletter, has taken to Twitter to share his thoughts about possible risks and opportunities the Merge brings to the global blockchain community.
Crypto civil war?
As per Mr. Niewold’s thread, there are three groups of risks associated with the Merge activation in September 2022, i.e., technological risks, logistical risks and forking risks.
IS A CIVIL WAR COMING TO CRYPTO?
Ethereum’s merge is coming, and with it comes the risk of a blockchain fork that could split the network in two.
So, what are the odds of a viable Ethereum fork? How could it happen? And what does it mean for crypto investors?
Read on:
— Jack Niewold 🫡 (@JackNiewold) August 5, 2022
Tech risks are mostly about the unexpected technical consequences of the PoS-to-PoW migration. Namely, the entire network might halt so that engineers would be required to restart Ethereum (ETH). Mr. Niewold highlights that it would not be “the end of the world.”
“Logistical” risks include the possibility of the Ethereum Merge being postponed yet again. Like every major upgrade in Web3, the Merge has had its date adjusted several times.
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At the same time, the risks associated with possible forking look the most dangerous for network participants. This would result in two parallel chains. The first one will run on PoS consensus while the second one will remain active on proof of work. Centralized stablecoins like USDT or USDC will therefore also have two “equal” versions which could result in a “civil war in crypto.”
Mr. Niewold opines that such an ending is “logistically unlikely” as the PoW version of Ethereum (ETH) will lack media coverage, developer activity and fiat gateways.
Expect chaos from fat cats
As such, big names will not be interested in building on “outdated” proof-of-work (PoW) Ethereum, so the community shouldn’t overestimate “forking risks.”
However, this uncertainty can result in massive pre-merge sell-offs. So, investors and traders should be supercautious in mid-September 2022.
As covered by U.Today previously, the Merge testnet activation is expected to take place on Sept. 19, 2022, two weeks after its late testnet upgrade Bellatrix.
