A change to the Ethereum network that will reduce the number of existing ether tokens could set the stage for “explosive growth” in the world’s second-largest cryptocurrency, experts have said.
On Friday, Ethereum blockchain developers approved a major change to how the network works, which will take effect in July or August.
It will review the bitcoin rival’s current auction system, under which users submit tokens to pay for transactions to be completed by miners.
Under the changes, known as EIP-1559 in Ethereum parlance, users will now send a base transaction fee to the network itself, which will destroy or “burn” the ether tokens, reducing the outstanding number.
Cryptocurrency analysts have said that limiting the amount of ether in existence, as the bitcoin system does, will put upward pressure on the price. When combined with the recent enthusiasm for cryptocurrencies, the price could rise sharply, they said.
“The most exciting thing for cryptocurrency traders is that Ethereum will now reduce the amount of ether pending by destroying some of the tokens every time they are used to process some transactions,” Edward Moya, chief market analyst at the firm, told Insider. Oanda currency.
“The endless supply of Ethereum was the least attractive part and optimism is now growing that the world’s most widely used blockchain will see a major shift in retail and institutional purchases.”
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Justin d’Anethan, a sales manager for cryptocurrency exchange Equos, told Insider that the proposed changes to the Ethereum network should “not only make the blockchain greener” by making transactions more efficient, “but which should also make it more scalable. “
He added: “Add to this less coins in circulation and you have a recipe for explosive growth.”
However, crypto skeptics argue that the rise in the prices of the world’s major cryptocurrencies has set them up for a sharp drop, as seen in the past.
The price of ether has risen more than 130% so far in 2021, taking it to $ 1,734 on Monday morning. But that’s out of a high of more than $ 2,000 touched in February.
It rose above $ 1,400 in 2018 before falling below $ 100 later that year.
The Ether-1559 Enhancement Protocol changes will take effect in July or August as part of a system update known as the “London hard fork.”