By Samuel Indyk
Investing.com – An upcoming upgrade on the Ethereum network has helped the cryptocurrency outperform Bitcoin in the latest week, despite the launch of the first Bitcoin Futures ETF on October 19th.
On Wednesday, the Ethereum developers are set to undertake the Altair upgrade which is another step in helping the cryptocurrency transition away from proof-of-work towards proof-of-stake when Ethereum 2.0 is up and running. Currently, Ethereum is a proof-of-work network, meaning miners are used to process transactions on the blockchain.
Ethereum 2.0 is expected to fully launch next year.
Proof-of-work is a power-intensive method of validation due to the large-sized computing power required to run the calculations.
Proof-of-stake is an alternative method aiming at addressing the environmental concerns surrounding cryptocurrencies and the power and energy used. Proof-of-stake essentially means a person can mine or validate transactions according to how many coins they hold, meaning the more coins owned by a miner, the more mining power they have.
The environmental concerns surrounding cryptocurrency mining have slowed widescale institutional adoption. Earlier this year, Tesla (NASDAQ:TSLA) CEO Elon Musk said his auto company would stop accepting Bitcoin as payment for its vehicles, citing the environmental impact of mining and transactions. However, Musk has since said that it would be likely that Tesla would resume accepting Bitcoin at some stage.
Over the last week, Ethereum has risen over 8% compared to a 2.5% decline for Bitcoin ahead of the upgrade. Year-to-date, Ethereum is up over 470% compared to Bitcoin’s 115% gain.
The outperformance in Ethereum comes amid a boom in popularity for Decentralised Finance (DeFi) applications and non-fungible tokens (NFTs) during the last year.