Photothek / Getty Images
A change in the Ethereum network that will cut the limit on the amount of existing ether tokens could set the stage for “explosive growth” in the world’s second largest cryptocurrency, experts said.
On Friday, Ethereum’s blockchain developers approved a major change in the way the network works, which will take effect in July or August.
It will review rival bitcoin’s current auction system, in which users send tokens to pay for transactions to be completed by miners.
With the changes – known as EIP-1559 in Ethereum jargon – users will now send a basic transaction fee to the network itself, which will destroy or “burn” ether tokens, reducing the pending number.
Cryptocurrency analysts said 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 dramatically, they said.
“What is most exciting for cryptocurrency traders is that Ethereum will now reduce the amount of ether pending, destroying some of the tokens each time it is used to process some transactions,” said Edward Moya, chief market analyst at the foreign exchange firm. Oanda.
“Ethereum’s endless supply was the least attractive part about it and optimism is now growing that the most widely used blockchain in the world will see a big shift in retail and institutional purchases.”
Read More: Wedbush says he will buy these 16 stocks that represent his analysts’ best ideas and should outperform in the next 6 to 12 months
Justin d’Anethan, sales manager for the Equos cryptocurrency exchange, told Insider that the proposed changes to the Ethereum network should “not only make the blockchain more environmentally friendly”, making transactions more efficient, “but also make it more scalable . “
He added: “Add to that less coins in circulation and you will have a recipe for explosive growth.”
However, crypto skeptics argue that the rise in prices of the world’s top cryptocurrencies has led to a sharp drop, as has been seen in the past.
The price of ether has risen more than 130% so far in 2021, reaching $ 1,734 on Monday morning. But that is well out of a high of more than $ 2,000 played in February.
It rose to more than $ 1,400 in 2018, before dropping to less than $ 100 later that year.
The changes to Ether Improvement Protocol-1559 are expected to take effect in July or August as part of a system update known as the “London hard fork”.