INSUBCONTINENT EXCLUSIVE:
Ethereum is the world's second-largest blockchain network, after bitcoinEthereum, the second-largest blockchain network, is about to
undergo a technical adjustment that will significantly alter the way transactions are processed, as well as reduce the supply of the ether
token and sharply boost its price
The scheduled coding revamp went live on August 4.The upgrade known as Ethereum Improvement Proposal (EIP) 1559 is similar, analysts said,
to a bitcoin "halving" event in which periodic adjustments reduced the supply of bitcoin
Each halving helped propel bitcoin's price to higher records.While bitcoin is the preferred store of value in the digital ecosystem,
Ethereum has emerged as the leading financial infrastructure, settling over $12 billion of daily transactions, according to a Grayscale
looming software upgrade.He estimates that the expected software adjustment next week, coupled with another upgrade in the first quarter of
2022, should "easily quintuple the price of ether" by next year
fundamentally changes the way transactions are processed on Ethereum by providing clear pricing on transaction fees in ether paid to miners
to validate transactions and "burning" a small amount of those tokens
The burned tokens will be permanently taken out of circulation.In token burning, miners would typically send the tokens to specialized
addresses that have unobtainable private keys
Without access to a private key, no one can use the tokens, putting them outside the circulating supply
in ether to miners to process their transactions.But the exact transaction fee is not clear and market participants say there is no way of
knowing the price beforehand.This creates two issues, said Matt Hougan, chief investment officer at Bitwise Asset Management."First, it
introduces a major uncertainty around whether you'll get your transaction processed in a timely fashion," he said
"Second, people overpay because they don't know the clearing price and they bid too much to make sure the transaction is processed."Will
part of which will be burned
Participants can also include an optional "tip" with their base fee to speed up the process, if desired.Another adjustment, market players
said, is doubling the amount of space available in each block
Blockchains like Ethereum settle transactions in batches or blocks
Each block can contain only a certain number of transactions.Blocks are propagated on Ethereum every 17 seconds and EIP 1599 is going to be
deployed on Block 12,965,000, which is estimated to happen on Aug
4, said DARMA'S Keys.There was a bug bounty, which paid people if they found bugs
That is about half as large a reduction proportionately seen in bitcoin "halving" events, he said.What does it mean for investors?The change
should make it easier for investors to understand the value of holding ether
Hougan said EIP 1559 should increase transactions on the Ethereum network and raise the use of ether, which will likely help bring a wave of
institutional investors into the market.
