Coinbase’s Suspension of Ethereum Operations During Merge Upgrade is Raising Skepticism
Coinbase’s initiative to protect Ethereum users during the Merge upgrade is raising suspicions
Coinbase’s latest decision and the official announcement to suspend ETH transactions during the phase of the Ethereum Merge Upgrade has gone beyond the initial shock and has given rise to a fair amount of skepticism. It simply means a three-tier suspension of trading, deposits, and withdrawal. Coinbase is no dwarf in the crypto market. In fact, it is the largest exchange in the US and what it does will obviously have ripple effects all around, not just in the crypto domain but in the broader arenas of economy and commerce as well.
There is as such no problem with the software update which is supposed to take place in mid -September. The update involves a method-oriented shift in the protocol’s consensus mechanism from the proof-of-work (PoW) method of authorizing transactions to the proof-of-stake (PoS).
Such a shift is increasingly gaining attention on the ground that the PoS saves energy more than its predecessor, that is the PoW, to the extent of 99.5%. Excessive energy consumption by cryptocurrencies has been a major issue with the critics calling for carbon emission reduction and eco-friendly transactions. Thus, there is no surprise in the move which has been described as a ‘precautionary measure” undertaken in the crypto market.
This is an excerpt from the announcement: “During the Merge, Coinbase will briefly pause new Ethereum (ETH) and ERC-20 token deposits and withdrawals as a precautionary measure.
Although the Merge is expected to be seamless from a user perspective, this downtime allows us to ensure that the transition has been successfully reflected by our systems. We do not expect any other networks or currencies to be impacted and expect no impact to trading for ETH and ERC-20 tokens across our centralized trading products.” Keeping in mind the possible fraudulent activities to take advantage of the situation Coinbase also issues a cautionary note to the people in the crypto market, advising them to remain inactive during the period of upgrade and not to indulge in any effort to individually upgrade their ETH.
Coinbase assures of what they claim to be a “smooth transition” and notes that they “view this event as a major step toward scaling adoption of the crypto market and will support it in a variety of ways that align with our mission to increase economic freedom in the world.
” But the fact remains that the move could not escape a heavy dose of skepticism in the cryptocurrency community is evident from the fact that Coinbase global shares have declined by an additional 9 percent right after the announcement.
This development has to be read along with the fact that the company has already received a blow in the second quarter of 2022, by having a slide of US$1.1 billion. Coinbase’s shares have already shrunk by five times from their highest note. Add to it the fact that it has laid off as much as 18 percent of its staff only recently. Under such circumstances, one cannot but suffer from skepticism.