THE LONDON HARD-FORK EVENT
What is the London Hard-Fork event?
The London hard-fork event is one of the five Ethereum Improvement Proposals (EIPs). These proposals (EIP-1559), including the London hard-fork event, aims to improve the future of Ethereum by incentivizing its mining and staking.
Until yesterday, the supply of Ethereum was not limited, it was infinite. This means that until yesterday miners would be rewarded with Ethereum with the addition of a new block on the Ether blockchain.
However, the London hard-fork event has changed this fundamental methodology of Ethereum. The miners will no longer receive additional coins on the validation of new blocks from users. The supply of Ethereum will now be fixed and eliminate the inflationary pressures faced by the coin.
The London hard-fork event has eliminated one of the very few drawbacks of the second largest cryptocurrency in the world.
The aim of this event is to make the transaction fees paid to the miners predictable for the users. Until this event was put in place, the transaction fees were determined by bidding during network traffic. Thus, the users ended up paying a higher amount of transaction fees when the network experienced traffic than when it was isolated.
This update will enable users to pay a base transaction fee, determined by an algorithmically developed system. The users will be able to view this transaction fee before the operation is conducted on the basis of the traffic experienced on the blockchain.
What are the details of this event?
The London hard-fork event was a much-awaited upgrade required for the sustainable future of Ethereum. This event was held in London on August 5, 2021 improving the operability as well as the adoption of the second largest cryptocurrency in the world. The hard-fork event made a permanent and an irreversible upgrade to the Ether blockchain. The event is preceded by the word ‘London’ as the developers issue the events in accordance with the cities in which they are held.
There have been many such events in the past. These upgradation events include the events held in Homestead, Byzantium, Constantinople, Istanbul, Berlin and finally London.
According to Greg Waisman, the co-founder of Mercuryo the highly anticipated Ethereum London hard-fork event will expose users to a more flexible and cheaper fee structure and introduce a mild burn effect, billed to make Ether deflationary.
How has Ethereum’s price reacted to this upgrade?
Ethereum has a history of reacting to the upgradation events. Usually, after each upgrade the price of Ethereum rises exponentially. This time is no different. Following the London hard-fork event, Ethereum’s price shot up through the roof. On the day of the event, Ethereum was trading at $2500. Within a week after the event ended and the upgrades were implemented, the coin made a high of $3200. This implies approximately a 28% rise in the value of the coin in under five days.
The rise in the price of Ethereum also highlights that the investors welcomed the upgrades with open arms. These upgrades have ensured the sustainability of Ethereum for the long-term.
What are the benefits of the London Hard-Fork event?
The London hard-fork event has protected the interests of the investors in various ways. These steps include the following:
- The event has implemented various upgrades for the coin. The users will be able to know the transaction fees with certainty.
- The transaction fees will not be as high as before due to the elimination of the bidding process.
- The fees will be determined by an algorithmic system designed to set up equilibrium fees as per the traffic faced by the network.
- The costs of mining such as Ethereum gas and other miscellaneous costs will not increase with an increase in traffic.
- The upgrade will quicken the process of transactions by disregarding the traffic on the network.
- The upgrades will burn high amounts of Ethereum coins so as to eliminate inflationary pressures on the coin.
- This upgrade of price transparency will alone increase the adoption of decentralized tokens, especially Ethereum.
- Ethereum will now be able to compete with Bitcoin in terms of its functions and operations. It will support the convictions of analysts supporting the theory that Ethereum may overtake Bitcoin in terms of market capitalization.
- Instead of rewarding additional coins to miners, they will be burned which will reduce its supply and increase its value.
- The upgrade will shift the fundamentals of the coin from Proof-of-Work to Proof-of-Stake.
In conclusion, this event assures Ethereum investors of the coin’s future prospects. The second largest currency may become the largest in the years to come.