Ethereum London Hard Fork will go live on August 4
- The Ethereum London Hard Fork, the largest upgrade in the history of cryptocurrencies is only two days away. It will go live on August 4.
- This upgrade includes five Ethereum Improvement Proposals (EIPs) while introducing changes to the code that must receive a node (Computer) from the stakeholder consensus. Much of the talk has been around the EIP 1559 is a code that will burn the transaction fees, taking some ETH out of circulation.
- Analysts with Goldman Sachs, one of the biggest investment banks globally, have in the recent past released reports on why Ethereum could surpass Bitcoin as the ultimate store of value.
What is the Ethereum London Hard Fork?
This upgrade includes five Ethereum Improvement Proposals (EIPs) while introducing changes to the code that must receive a node (Computer) from the stakeholder consensus. Much of the talk has been around the EIP 1559 is a code that will burn the transaction fees, taking some ETH out of circulation. According to Tim Beiko, a developer with the Ethereum Foundation, coin burns tend to squeeze supply as demand increases. This factor may bolster Ethereum’s price significantly upward.
The current fee system operates in some way like an auction house, meaning people tend to overpay for their transactions to be prioritized. According to Tim Beiko, “think like a 20% reduction, not like a 20x reduction.”
The second component of the EIP-1559 code ensures that the fee is not channeled to miners, the people currently operating hardware in different locations globally to validate a transaction. That fee of the transaction is being burned and sent to an inaccessible wallet.
But those aren’t the only token the London Hard Fork will take away with. Gas tokens GST2 and CHI used by developers to secure lower prices when deploying smart contracts will become obsolete.
This code is an extension to the EIP-1559. It comes to expand user experience on smart contracts.
These contracts are the powerhouse of the massive decentralized finance (Defi) sector. Their main goal or purpose is to eliminate the middlemen while putting the primary user in control. The Defi ecosystem on the Ethereum blockchain has been grappling with high gas fees, threatening its sustainability. With lower transactions fees, the sector is expected to hit significant milestones.
In addition to that, EIP 3529 has as a primary goal to reduce clogging as users keep junk data on the network to clean it up when gas fees are higher to get refunds.
The EIP-3529 is not significant for itself, according to Beiko. However, it is essential for the network because it sets the framework for updates by securing some space to allow developers to create new versions of smart contracts. Look at it as a trick to introduce new functionality to the Ethereum Virtual Machine (EVM) without changing anything.
This code is a proposal developed to delay the commonly known “difficult bomb” to the second quarter of 2022. This is supposed to make it difficult for miners to validate transactions through solving complex cryptographic problems meaning the Ethereum Network will become slower. Therefore, EIP 3554 will give more time to Ethereum 2.0 to change from Proof of Work (PoW) that it is to Proof of Stake (PoS).
Ethereum London Hard Expected Impact
Analysts with Goldman Sachs, one of the biggest investment banks globally, have in the recent past released reports on why Ethereum could surpass Bitcoin as the ultimate store of value. The analysts theorized Ether as the asset with the utmost real-use potential, considering the ballooning smart contracts development space. In their opinion, Bitcoin is indeed the flagship of the cryptocurrency industry but loses out on Ethereum’s real-world use cases.
The report cited Goldman’s Tuesday note to clients which, while bullish on ether, denied cryptos’ superiority to gold when it came to taking the top spot among safe-haven assets.
“Gold is competing with crypto to the same extent it is competing with other risky assets such as equities and cyclical commodities,” the note said. “We view gold as a defensive inflation hedge and crypto as a risk-on inflation hedge.”
Disclaimer – I/we have no position in any stock mentioned. I wrote this article myself, and it expresses my personal opinions. I am not receiving any compensation for it, other than FDGT Academy. I do not have or had in the past any business relationship with any company that is mentioned in the above article.
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