Today is a significant day for Ethereum holders, developers and traders. The change is well known as Ethereum Improvement Protocol 1559 (EIP-1559) and will be added to a network upgrade called the “Ethereum London Upgrade Hardfork” which will happen in the next 38 blocks.
Hard fork, What Does it Mean?
A hardfork is the split of a blockchain network into a network that has proposed features added to it. After the upgrade, any transaction that is added to the old network becomes null and unrecognized.
The London Upgrade, And Its New The Features
- Transaction Fees More Predictable
Ethereum London Upgrade Hardfork (EIP-1559) is all about making transaction fees more predictable, therefore making the Ethereum network easier to use. Normally, transaction fees are highly volatile because the network uses an auction system. Users compete against one another to have their transactions processed and verified by miners.
This results in a random upsurge in transaction fees when the network is busy. After EIP-1559, “a base fee,” determined by the algorithm depending on how busy the network is, will be payable. The network’s base fee will be clear to network users as they go to perform transactions because fees won’t haphazardly skyrocket immediately. This gives users a chance to confirm the fee and even wait if the base fee is high.
Coin burning is removing coins or tokens from the circulating supply by locking them in an inaccessible wallet. Basically, a wallet that only has public keys and no private keys. With the Ethereum London Upgrade Hardfork , the network will remove coins from circulation. Do you have an idea where the coins burned will come from? Well, if you are used to the normal concept of mining, you might think that the base fee payable will be credited to the miners, well that is not it. The base fees are the ones to be burnt once users pay them.
- Effects On The Price
Many experts expect the price of ETH to soar over time as ETH are removed from the circulating supply. Most times, this plays well, as cryptocurrencies are scarce by nature. When the law of demand and supply applies and more transaction are done on the Ethereum network, it is only a matter of time before the price appreciates.
What You Need To Do
You do not want to be left behind during such upgrades. Here are some things you need to do not to be left on the old network.
- Hold your ETH on wallets that will support the fork.
- If you are a trader, confirm if your exchange will support the fork.
- Try not to send your ETH around until the upgrade is complete.
Originally published on CryptoCurrency Academy
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