If you’re feeling carried away by all the hype surrounding Ethereum’s upcoming upgrade, you’re not alone.
Google searches for “Ethereum Merge” have trended upwards over the past 12 months and recently peaked.
Along with all the interest, Ether’s price has also seen a surge. It hit a two and a half month high this morning as it approached $3,350. It is currently trading around $3,406, up 6% in the last 24 hours and almost 19% over the last week.
Why all the hype? Investors might experience a little FOMO or fear missing out, Ilan Solot, a partner at Tagus Capital Multi-Strategy Fund, a blockchain-focused venture capital fund, told CoinDesk.
“FOMO advocates ETH pre-merger.”
So is the FOMO justified? Maybe a little bit.
Finally, the merger is “a really big deal,” Bitwise Asset Management chief investment officer Matt Hougan told Fortune. “The market will be pricing in this change for months. If the merger is successful, ETH will be one of the most popular crypto assets for institutional investors for the foreseeable future.”
Here’s what drives all the feelings.
But why all the FOMO?
Ethereum currently relies on the so-called proof-of-work, in which miners have to solve complex puzzles to validate transactions and create new coins. This process requires enormous computing power and is often criticized for its environmental impact.
With the planned upgrade, Ethereum will move to proof-of-stake, which would allow users to validate transactions based on how many coins they contribute or “stake”.
If it goes ahead as planned, the merger would be an important milestone for a number of reasons.
For one, crypto mining on Ethereum would become obsolete, which would significantly reduce the environmental impact of the blockchain. Post-merger supply of Ether would also likely decrease as fewer coins are expected to be issued post-merger, increasing scarcity and price. Blockchain security against potential attacks will reportedly improve. And because of all of the above upgrades, institutional investment in the Ethereum network is expected to increase.
The story goes on
While there’s no official timeline for the merger just yet, some are predicting it could happen this summer.
All of this has caused the price of Ether to surge, which is reflected in its current jump.
“I think ETH’s strong performance recently is partly due to anticipation of the merger,” Hougan said.
A lot of hope, but still a risk
An increase in mainstream media attention surrounding the merger could also contribute to the hype and subsequent FOMO.
“I think non-crypto-natives are taking notice of the merger for the first time. Outside of crypto channels, there really wasn’t much discussion about the merger until a few weeks ago,” he said. “Now that mainstream media is taking notice and institutional investors are hearing about it, people are realizing what a big deal this is.”
Of course, while the potential for a successful completion of the Fusion is cause for “understandable excitement,” it’s worth noting that it’s not without risk: It’s a very high-stakes technological upgrade, and there’s a risk of it being delayed or there could be issues with implementation,” Hougan said.
This story was originally published on Fortune.com