Ethereum has been in the headlines quite a bit this week, as the Ethereum community prepares for the upcoming Ethereum hard fork. The Ethereum hard fork is a necessary procedure that allows Ethereum to survive, while also allowing for the Ethereum blockchain to move forward in development. While the Ethereum community is busy hard forking, a different form of a hard fork is happening in the Bitcoin community.
A hard fork is a change that adds new rules and creates a new version of an existing blockchain. The Ethereum community is currently dealing with a (proposed) hard fork. The hard fork will result in an upgrade of the Ethereum blockchain, which at the time is less than two weeks away. The hard fork, known as Ethereum Improvement Proposal #52 or EIP #52, would allow for changes to the Ethereum blockchain that would allow for easier development of decentralized applications (dapps).
Ethereum has been on a tear recently, at least relative to its competitors. As of this writing, the price of ether is trading at about $330 which trails only Bitcoin cash for the number 1 spot in the cryptocurrency world. A major cause of the Ethereum’s increase is likely the upcoming hard fork. Ethereum’s developers have been debating whether to hard fork to make the blockchain faster or smooth out the new features (what I think is known as the Byzantium fork). The fork is scheduled to occur at block number 4.2 million and the current debate is whether to make the fork happen immediately after the fork or wait until the Byzantium chain stabilizes.
The price of Ethereum has started to rise over the past 10 days as the hardfork in London, which is expected to take place in July, approaches. The price of the currency gradually declined in June, peaking around June 26 at $1768, the lowest level in recent months. But when the focus shifted to the upcoming hard fork, the hype surrounding the new update pushed the price back above $2,000.
Ethereum nearly reached the $2,400 mark on Sunday, peaking at $2,384. At the start of the new week, however, the price dropped again and stood at $2,269 at the time of writing.
What’s interesting about the recent price increase is that trading volume has remained relatively small, at about $18 billion, according to the data. Another factor that may have affected the price and pushed it higher was the expiration of option contracts worth $230 million. The contracts ran just two days before ETH on Friday the 2nd. July reached a two-week high.
After the contracts expired, the bulls and bears began to announce their expectations for the future, and the bulls managed to gain the advantage. At the time of writing, the currency is still up 11% from last week, although it has fallen 2.77% in the past 24 hours.
What is a London Hardfork?
The long-awaited London hardfork will bring a new update to Ethereum later this month. The hard fork is expected to have a strong impact on the price of Ethereum, and in fact some of that impact has already manifested itself before the fork itself.
As some may already know, Ethereum is planning to introduce several new mechanisms. One is the so-called scarcity mechanism, which will introduce regular burning of ETH tokens. As a result, the circulating supply of the project will begin to decline, meaning that there will be fewer ETH coins available, which should lead to a price increase.
Moreover, it is this update that will allow Ethereum to finally move to Proof-of-Stake and get rid of the Proof-of-Work method. The main effect of this will be a reduction in Ethereum’s carbon footprint, as well as a drop in gas costs, which peaked earlier this year due to all the activity on the network.
Ethereum offers conventional transactions and investments, dApps, smart contracts, DeFi and even the NFT sector which is expected to explode in 2021. All this activity generated a huge amount of traffic on a network that could only handle a few transactions on the blockchain, resulting in long wait times and huge transaction fees for those who wanted their payments processed faster.
Historic moment for ETH
The move to PoS will reduce these costs and bring back developers, projects and merchants who have migrated to cheaper networks due to high costs. In fact, ETH is already growing in popularity, with over 750,000 active addresses registered last week, more than Bitcoin currently has.
Analyst firm Santiment called it a historic moment, as it was the first time Ethereum’s number of active addresses exceeded the number of active addresses of the world’s first and largest cryptocurrency.
Speaking of bitcoin, it is also worth noting that BTC has not seen the same price movement as ETH. Instead, the currency continues to trade in a sideways trend, slightly below the $35,000 level, where it spent most of last month.Ether, the second-largest cryptocurrency by market cap, has had an incredible 2017, rising almost threefold in value over the course of the year. Today, it is trading around $300, a level it hasn’t seen in almost two weeks. The reason for the recent surge? An upcoming software update for Ethereum, known as “Ethereum Improvement Proposal #1,” or EIP 1. The update is scheduled to go live on block number 4,000,000 on October 16, 2017.. Read more about ethereum hard fork date 2021 and let us know what you think.
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