Ethereum is changing its systems from "Proof of Work" processes to "Proof of Stake." This could boost its overall market value and provide its investors an alternative way of earning coins. Effects are being seen today, but big investment returns could take until next a few years to come out.
Ethereum took a severe drop of value in these last few hours, from a $2137 peak on June 1 at 7:59 PM to a $2027 by June 2 at 2:29 PM. But it has slowly recovered value up to $2074 as of time of writing.
Cryptocurrency markets remain dynamic and unpredictable, leaving investors on edge for a new high in the market trend. Reports are coming in that a new Ethereum investment trend might boost its value significantly in the coming years. It also includes an attractive proposal that cryptocurrencies would be adopted beyond being digital assets.
Experts See $40 Billion Industry Amid Upgrades
Forbes reported that analysts from investment firm JPMorgan argued that cryptocurrencies running on energy-efficient networks will lead to new ways to make money, increase popularity and increase value. The new system would be called staking, in which investors can gain traction as their primary source of revenue.
Generally, cryptocurrencies such as Bitcoin and Ethereum blockchains use high energy-demanding processes to ensure all transactions on the network are valid. This system is called "Proof of Work." Cryptocurrency "mining" happens because cryptocurrencies operate their "Proof of Work" through the computer's computing capacity.
In comparison, "Proof of Stake" is a much more traditional version of investing. "Proof of Stake" happens when investors locksup their funds on the blockchain in exchange for rewards. This process is more scalable and energy-efficient during its transactions.
The analysts from JPMorgan predict that the crypto industry could earn up to $40 billion annually by 2025 just by making the switch.
Ethereum Price, Investment Predictions
Ethereum is reportedly switching its "Proof of Work" process to "Proof of Stake" amid the need for more energy efficient processes. This could significantly affect the value for the long-anticipated Ethereum 2.0 launching next year.
Experts predict that staking could be a source of income for investors using intermediaries like Coinbase. Forbes noted that as of today, staking generates $9 billion worth of revenue annually for the cryptocurrency industry. However, the Ethereum shift could balloon the staking industry's earnings to $20 billion by 2022 and, as mentioned, $40 billion by 2025!
Staking offers a lot of financial gains. However, it also comes with a few risks. Staking is heavily affected by volatility and market decline. Similar to value gains, losses could also balloon up at dangerous rates.
However, as previously mentioned, staking needs a stable cryptocurrency market to work with. This would mean that clear results for the "Proof of Stake" from the Ethereum change would be visible next year at the earliest.
Although Ethereum is investing its money in a long-term plan to succeed, cryptocurrency values and predictions are subject to change at any given moment in the market.
Related Article: Ethereum Price Prediction: Analyst Forecast Reveals Huge ETH Value Surge to Defeat Bitcoin