Ethereum, the second largest cryptocurrency after bitcoin, has surged in the past year alongside the surging bitcoin price.
Bitcoin price has crossed its late 2017 high of around $ 20,000 per bitcoin and has been roaring towards nearly $ 60,000 in recent weeks, while ethereum’s ether token price has also pushed into new territory – 30% higher than its early high 2018.
A proposed upgrade to the ethereum blockchain that will destroy (or “burn”) ether tokens could mean ethereum becomes more “noise” than bitcoin, ethereum co-founder Vitalik Buterin said.
The price of both bitcoin and ethereum has skyrocketed in recent months, rising to record highs like [+]
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Ethereum’s upgrade, known as EIP-1559 and part of a broader move to ethereum 2.0, will overhaul the network’s current transaction fee system, with users sending a fee to the network itself instead of the so-called miners who maintain the network. These fees will then be burned, reducing the overall ether supply – something that is itself a controversial topic among the cryptocurrency community.
“If bitcoin and the fixed supply are healthy money, then that is good if you have a decreasing supply [ethereum] ultrasound money, “asked Buterin, speaking with tech investor Naval Ravikant on a recent episode of the Tim Ferriss Show podcast.” Good money ”refers to the stability and usefulness of a currency as a store of value.
While Buterin called the question a “joke,” he went on to explain that there is a clear possibility that the radical upgrade to the ethereum network, which was approved by developers last week and is expected to be implemented in July, could result in a shrinking supply of ethereum.
“If the requirements to use ethereum are high enough, there would actually be more [ether] destroyed then created, “said Buterin.” Actually, it’s not even that far-fetched a possibility. If you look at the transaction fees for the past month, they have actually been higher than the block rewards for the day on many days. “
The recent extreme ethereum price hike, seen as a 400% ethereum rise since the broader bitcoin and cryptocurrency market took off in October, comes amid an increase in interest in decentralized financing (DeFi) – with using cryptocurrency technology to interest traditional financial instruments such as loans.
With many of the largest DeFi projects built on top of ethereum’s blockchain, the token has skyrocketed as users flood the network. Meanwhile, the latest cryptocurrency craze for so-called non-replaceable tokens (NFTs) has also resulted in heavy traffic on the underlying ethereum network.
When Ravikant warned that these applications built on top of ethereum could be victims of “hacks … break-ins and failures,” Buterin cited the controversial cryptocurrency chain, which is price-pegged one-to-one to the US dollar. , like a ‘ticking time bomb [demon]for bitcoin – with an emphasis on the long-running competition between the two largest blockchain ecosystems.
In the latest ethereum price hike, the price has risen well above its early 2018 high – by [+]
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While most miners seem to be on board with ethereum’s planned upgrade, some, including the major ethereum mining group SparkPool, have registered their opposition to it.
“I am concerned about a possible miners’ rebellion that could weaken the credibility of the ethereum network,” Richard Johnson, Texture Capital’s CEO, said via email. Johnson added that he is “skeptical” whether the upgrade will have a “meaningful” impact on ethereum fees, which have risen more than tenfold in the last 12 months.
Amid the rush for ethereum, a number of ethereum rivals have emerged in recent months, claiming to offer similar decentralized platforms with faster transaction times and lower costs and looking to take advantage of ethereum’s troubles.
“In the current crypto bull run, ethereum appears to be falling victim to its own success,” said Antoni Trenchev, managing partner at Digital Asset Manager Nexo, in response by email. “The massive influx of users, developers, decentralized apps, DeFi protocols and the growing NFT craze are storming the blockchain, leaving it heavily overloaded.”
However, Trenchev added that he expects “soon enough to get a glimpse of that real bull run after the release of EIP-1559, where the hammer of the real bulls comes down with ethereum 2.0”.