Ethereum coin

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The ether soared to a two-month high after developers successfully completed the final dress rehearsal for a key update due next month.

The world’s second-largest cryptocurrency hit a price above $1,927 around 8:20 a.m. ET on Thursday, according to data from CoinMetrics. This is the highest level since the beginning of June and a jump of 13% in the last 24 hours.

On Wednesday, Ethereum held its final run for a “merger,” a key event expected to make it faster and more energy efficient. One of Ethereum’s testnets, called Goerli, simulated a process identical to the one the mainnet will perform in September. Testnets allow developers to experiment and make necessary adjustments before launching updates to the main blockchain.

The merger will transition the underlying ether blockchain from a proof-of-work system to a more efficient model called proof-of-stake. Proof-of-work consensus mechanisms depend on crypto miners to verify transactions. On the other hand, proof-of-stake networks require validators to have a certain number of tokens to participate, making them much less energy intensive. The event, which has been postponed several times, is expected to take place on September 19.

Once complete, the update is expected to speed up transactions on the Ethereum network and make it more energy efficient, and supporters hope it will address criticism of cryptocurrencies’ environmental impact. This has led some investors to agree that Ether may eventually steal Bitcoin’s thunder. Bitcoin has lost ground to other tokens in recent years, with its market dominance falling below 40% from nearly 70% in early 2020.

For IT specialist Kai Burchardi, the question of whether Ethereum will eventually dethrone Bitcoin as crypto king is “largely irrelevant” since the two are not directly competing with each other.

“The purpose of why you buy bitcoins, in terms of thinking, and what you actually want to do with it, is fundamentally different than when you use ethereum,” said Burchardi, managing director of BCG Platinion, the IT division Boston Consulting. Group.

“Ethereum… is not a use case. It provides opportunities to implement really good use cases like NFTs. [nonfungible tokens] and banking products on the platform. Bitcoin is a use case.”

Following the success of the merger test, Ether led a broad rally among digital assets on Thursday, as the combined value of all cryptocurrencies rose more than $70 billion on the day to $1.2 trillion. Bitcoin was up 6% at $24,507, hitting a near two-week high, while Binance token BNB rose 3% to $330.

However, investors are bearish on cryptocurrencies more generally after the catastrophic collapse of the $60 billion stablecoin terra, which sent shockwaves through the crypto market and helped trigger the collapse of investment firms Celsius, Three Arrows Capital and Voyager Digital. The entire crypto market has lost nearly $2 trillion in value since peaking above $3 trillion in November.

— CNBC’s Mackenzie Sigalas contributed to this report

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