major update for the world’s second blockchain

Ethereum activated on August 5 the “hard fork London”, one of the most important updates of the most popular cryptocurrency in the world after Bitcoin. Its objective is to address two Ethereum difficulties, the scaling of the blockchain and the very volatile, sometimes very high transaction fees. Problems that have tended to worsen in recent months with renewed interest in non-fungible tokens (NFTs), mostly built on Ethereum’s blockchain and the growth of decentralized finance.

Stabilize transaction costs

Ethereum has had several updates already, 11 in all. Hard forks named after the name of the city where the Ethereum developers conference is being held. However, this creates a stir by its magnitude. Five proposals, or Ethereum Improvement Proposals have been unveiled, one of which is eye-catching, the EIP-1559.

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It deals with changing transaction fees. Until the update, users participated in an open auction with each block, it offered a bid to the miner. This system had the fault of, at times, causing a runaway prices, some users paying a large sum to obtain a privileged status within the bloc. Auston Bunsen, co-founder and CTO of blockchain specialist QuikNode, explained to CNBC than ” Sometimes people are willing to pay a lot to get into a blockchain. Fifteen-fifty-nine seeks to remedy this problem by creating a base fee “.

Now the transaction fees will be calculated by an algorithm, based on aggregate demand. The goal is to standardize the prices, but this does not necessarily mean lower Ether prices. Users will also have the option of leaving a tip to get a good position in the queue. For Nic Carter, General Partner of Castle Island Ventures and Co-Founder of Coin Metrics., “ This adds a lot of complexity to the fee logic, but it is an interesting approach that could potentially stabilize the fee dynamics. “.

The size of the blocks will also be doubled. Theoretically this means that twice as many transactions will be possible, but the blocks should stay half full. The objective again is to stabilize costs with a model easily adaptable to fluctuations in demand.

Ethereum miners doomed to disappear?

The other notable proposition of this hard fork is the EIP-3554. Ethereum will do without the classic “Proof-of-work” mining system, which creates Ether by solving equations. A method of operation criticized because it consumes energy. This is the reason that prompted Elon Musk to abandon Bitcoin as a payment method for Tesla.

Ethereum touts a new system that could be 99.95% less greedy. This system called “proof-of-stake” is, as its name suggests, based on proof of stake. The user will tap their Ether stock to verify transactions and coin a new token.

A major change for the cryptocurrency community. Miners will earn less money with this hard fork and the transition to “proof-of-stake” may make Ethereum impossible to mine when it is completed.

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