According to Ethereum creator Vitalik Buterin, the most major modification to the Ethereum blockchain since 2015, which went into effect on Thursday, the network is well-positioned to make an even greater upgrade to cut its energy usage by 99 percent.
The world’s most popular blockchain, known as the London hard fork, has upgraded its software to incorporate a fee reduction feature known as EIP 1559. According to the tracking website ultrasound. money, the fee decrease has already erased $2 million (approximately Rs. 14 crores) worth of Ether, the company’s native coin. This might put upward pressure on Ether’s price in the future.
“1559 is definitely the most important part of London,” Buterin said during a Bloomberg News interview from Singapore. The London update is “proof that the Ethereum ecosystem is able to make significant changes.”
Ethereum and it’s more well-known competitor Bitcoin both use a proof-of-work method that needs a worldwide network of computers to function 24 hours a day, seven days a week. For years, Ethereum software engineers have been trying to convert the blockchain to a proof-of-stake system, which utilizes a whole new approach to network security while simultaneously eliminating the carbon emissions concern. The transition to ETH 2.0 will be accomplished through a process known as the merge, which is scheduled to take place in early 2022, but may happen as soon as the end of the year, according to Buterin. He claimed the London hard fork has given him more confidence in the merger.
Ether, like Bitcoin and other digital assets, has witnessed an amazing price increase in the last 12 months. According to Bloomberg data, Ether has increased by approximately 590 percent in the last year, while Bitcoin has more than quadrupled. These increases occurred despite the fact that both currencies have fallen by about half from their April all-time peaks.
The emergence of non-fungible tokens, or NFTs, which are digital files whose validity and scarcity can be confirmed by a blockchain like Ethereum, is contributing to Ether’s price rise. This year, NFTs have grown in prominence thanks to transactions like the record-breaking $69.3 million (approximately Rs. 510 crores) sale of digital artist Beeple’s “Everydays: the First 5,000 Days” and a video of a LeBron James dunk. The digital tokens are now being offered by everyone from art galleries to the International Olympic Committee, fashion businesses, and Twitter Inc.
The update on Thursday will also bring Ethereum closer to Bitcoin’s operating model.
Unlike Ether, Bitcoin has always maintained a fixed quantity of 21 million coins since its inception in 2009. Because of this distinction, detractors of Ethereum argue that it should not be compared to Bitcoin as a digital currency.
In his 2013 white paper describing the development of Ethereum, Buterin set a limit on the quantity of Ether that may be generated. However, there was always the possibility of making adjustments, and the concept of going to proof of stake was always the goal. Buterin believes that proof of stake will someday affect the economics of Ether.
In his original vision, “There wasn’t really the possibility of making very strong, long-term commitments to the monetary policy,”
Then, in 2018, he went to Cornell University for an economics and computing workshop, where the inefficiency of first-price bids was explored. This is an auction in which the highest bidder wins, and it’s how Ethereum and Bitcoin’s fee marketplaces are set up. Because of EIP 1559, Ethereum has been removed from that system. On Thursday, Ethereum’s block size became flexible, which is a significant development. Previously, the number of transactions that could fit into a single block was set, which meant that users had to wait for their transactions to be completed when the network was busy. Blocks can now expand or shrink in size to fit the number of transactions coming in.
“Now it gets much easier to send a transaction that will get included in the next block and that’s very important to user experience,” Buterin added.