Why Crypto Is Watching Ethereum’s ‘Shanghai’ Upgrade
The Ethereum network is set to undergo a technical revamp on April 12 that will allow users to withdraw tens of billions of dollars of its native token, Ether. Known as the “Shanghai” upgrade, it's a necessary step after the world's most commercially important crypto platform shifted to a less power-hungry process for ordering transactions. Investors burned by recent turmoil in crypto markets will be wondering if, presented with their first opportunity to withdraw their tokens, some Ether holders will run for the hills.
It's a computer network that hosts what are known as smart contracts — self-executing software agreements in which a chain of actions can flow from defined conditions and contingencies. Since it was introduced by crypto entrepreneur Vitalik Buterin in 2014, it's become a popular platform for developing apps used for everything from trading to gaming. Transactions on Ethereum and many other crypto platforms known as blockchains are publicly viewable and are built on open source software, so developers can jump in and try to make improvements. Ether's value tumbled during the “crypto winter” of 2022 that saw investors pull back from many digital assets. But the appeal of Ethereum's underlying technology has endured.
Until September 2022, Ethereum relied on a costly, energy-intensive process known as proof-of-work to order transactions. That changed when a technical overhaul known as the “Merge” applied an alternative approach — proof-of-stake. People who put up, or stake, Ether can become “validators” of transactions on the Ethereum blockchain and receive an income in return — much like deposits at a bank. Since 2020, users have been able to stake their Ether but couldn't withdraw it. Shanghai will allow them
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