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The Bitbuy Brief: Everything You Need To Know About ETH’s Upgrade
Article Author: Bitbuy Staff
Bitbuy Staff
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Issue 146: Everything You Need To Know About ETH’s Upgrade🔧

August 5th, 2021

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Weekly Market Recap 

 

Analysis: The talk in crypto circles has been all about ETH this week, and the market has responded. ETH was up 15% in the 7-day period. Other ERC-20’s who use Ethereum network, also saw similar gains. Spot volumes continue to increase month over month, as the entire market has mini-rallied from July’s recent lows.

Big Story: Everything You Need to Know About Today’s Ethereum Upgrade

Ethereum just completed a major technical adjustment. August 5th was determined to be the date the Ethereum blockchain underwent its 11th upgrade or “hard fork,” known as “London.”

The London update contains five Ethereum Improvement Proposals (EIPs) to optimize the digital currency for improved market capitalization. Although 5 EIPs make up this fork, EIP-1559 is known to have the most significant impact, altering the way transactions are processed and decreasing the supply of tokens.

Each transaction on the Ethereum network requires users to bid against each other to pay for the miners to process their transactions. Therefore, when the network is congested, transaction fees will increase dramatically. Ethereum founder Vitalik Buterin said it himself, stating, “people needlessly overpay massively.”

With the EIP-1559 software upgrade, miners will receive a transparent fee for each transaction. A small amount will then be burnt in each transaction, permanently removing these tokens from circulation.

With the token burning process, miners will send tokens to a specialized address with inaccessible private keys.  Removing tokens from the circulating supply will of course have an affect on the remaining tokens, creating a deflationary dynamic that is seen in other crypto tokens.

The process, in many ways, is similar to the bitcoin “halving,” which many recognize as a regular event that reduces the supply of bitcoin tokens and, as history shows, propels the price upwards.

Will using Ethereum improve with this update?

Currently, the uncertainty of the transaction fee has resulted in people overpaying their transaction fees or being forced to wait for more than the usual amount of time for the transaction to be processed. This new update will also help increase the number of transactions conducted on the Ethereum network and solidify the network as a form of payment, since transaction fees can only be paid in the network’s native currency. Many analysts believe the combination of these adjustments will drive new institutional investors to the market.

This isn’t the only update expected for the Ethereum network. The larger overhaul is known as Ethereum 2.0, a switch to the proof-of-stake system. In this system, users will put forward an ether “stake,” which can then validate transactions and earn ETH. With Ethereum 2.0, the network is believed to improve scalability and accelerate the DeFi and NFT ecosystems. ETH 2.0 is scheduled to roll out sometime in the next 1-2 years.

Other Headlines & News

US Senators File Crypto Broker Amendment to Infrastructure Bill After Industry Backlash – CNBC
Uruguayan Lawmaker Proposes Bill to Treat Crypto as Legal Tender – Coindesk
City-state Has Become an Important Front in Industry’s Battle to Woo Financial Regulators – Financial Times

Spain Opposition Party Introduces Bill to Allow Mortgage Payments With Crypto – Coindesk
Square Customers Buy $2.72 Billion Worth of Bitcoin in Q2 – Bitcoin Magazine