Ethereum Transformation Secrets – How Big of an Impact on Cryptocurrency Price?

Jakarta, Pintu News – Ethereum completed a major transition from Proof of Work (PoW) to Proof of Stake (PoS), drawing the attention of various parties in the cryptocurrency industry. The move was both hailed as an energy revolution and criticized for its potential impact on network value. In this article, we objectively summarize the various viewpoints and current data. We also review other consensus technologies such as Proof of Space and its implications on the future of crypto.

What is Proof of Work and Proof of Stake?

Proof of Work (PoW) is the earliest consensus system used by Bitcoin , where participants – called miners – solve cryptographic puzzles using high computing power. The main problem with PoW is its huge energy consumption; for example, Bitcoin is known to use the energy equivalent of a small country. These lazy hurdles triggered the development of alternative systems such as Proof of Stake (PoS).

Proof of Stake (PoS) selects validators based on the amount of cryptocurrency they own and “stake” on the network. This approach reduces the energy load and operational costs, promising higher efficiency. Ethereum embraced this method in 2022, which became known as “The Merge”.

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Impact of Ethereum’s Switch to PoS

Ethereum’s transition to PoS resulted in a more than 99% reduction in energy consumption. This addresses the long-standing criticism of blockchain’s environmental impact. However, some are concerned about the security aspect: PoS is considered risky against “nothing-at-stake” threats and long history attacks.

In terms of value, some analysts such as Meltem Demirors state that Ethereum lost up to US$1 trillion in potential value by abandoning PoW. But on the other hand, PoS supports a more inclusive ecosystem of validators and cuts transaction fees, enabling wider adoption in the cryptocurrency ecosystem.

Economic Impact and Market Value

When the transition occurred, the price of Ethereum declined by more than 12%, but in the long run, it is considered to support the narrative as an “ultrasound money” currency due to the burning fee mechanism such as EIP-1559. Currently, Ethereum is in an inflationary phase (0.76%), with 943,000 ETH issued per year, burning only 27,000 ETH.

Justin Drake of the Ethereum Foundation proposed a Pectra upgrade to shift net issuance back into deflation. However, increased network activity remains a key requirement for Ethereum to return to competing in terms of value.

Other Consensus Alternatives: Proof of Space

Besides PoW and PoS, other technologies such as Proof of Space (PoSpace) and Proof of Space-Time (PoST) are emerging. PoSpace uses storage capacity as proof verification capital instead of computing power. This method is more environmentally friendly as it focuses on disk storage which is relatively energy efficient.

The PoST concept goes a step further by suggesting that storage is also maintained for a certain amount of time, as used on the Chia network. This model is widely regarded as a fair and sustainable alternative in the crypto ecosystem, although it is not as well-known as PoS or PoW.

Weighing Security, Scalability, and Energy

Academic analysis concluded that PoW still has a formal lead in terms of security, especially from 51% attacks. However, PoS can match this level of trust if the economic and penalty mechanisms are well designed.

Another factor is energy efficiency: PoW consumes thousands of times more energy than the best PoS system, while PoS and PoSpace can offer a more balanced resource allocation. So, the decision to implement one consensus mechanism should consider three aspects: security, cost, and environmental footprint.

Conclusion

Ethereum’s switch from Proof of Work to Proof of Stake sparked intense debate: from a drastic drop in energy consumption to doubts over value and security. While technologies like Proof of Space offer promising alternatives, neither system is perfect. The future of crypto is filled with dynamics and innovation; a healthy ecosystem will depend on the balance between security, scalability, and sustainability. Investors and developers need to understand consensus technology before making strategic decisions in the cryptocurrency space.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities are subject to high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying andselling Bitcoin and other crypto asset investments are the responsibility of the reader.

Reference:

• Godfrey Benjamin/Meltem Demirors – Ethereum’s PoS Move Criticized – Did It Cost the Market $1 Trillion? Accessed July 10, 2025.