Ether is the “fuel” used in the Ethereum network. It is literally burning up as data shows Ethereum transactions hitting an all-time high over the last 30 days.
The Ethereum “London Hard Fork” started on 5th August 2021 and increases the network’s capacity by 2,000%.
- The price of ether surged 8% on the Coinbase Pro platform but has since pared some of those gains.
The ethereum network is undergoing an upgrade this week. The purpose of the upgrade is to increase the network’s capacity and throughput. This will result in more people wanting to use the ethereum network, but also there will be a “burning” of some of the ether coins that are stored on the ethereum blockchain.
Since the “London hard fork” upgrade on Ethereum went live on 5th August 2021, around 2.36 Ether has been burned each minute as per a report from etherchain.
One of the Ethereum Improvement Proposals (EIPs) was EIP 1559, which was designed to increase the capacity of the Ethereum network. It was this EIP that caused a hard fork in the Ethereum blockchain.
“With more scalability, ethereum can support larger, more complex computational use cases like social networks, market places, and various creative tribes,” Lex Sokolin, global fintech co-head and head economist at blockchain company ConsenSys, told Insider.
Scalability essentially means fast transaction speeds and increased efficiency.
This change was made so the bitcoin network could function properly and ensure its users were not at a disadvantage due to heavy traffic. The new fee structure and faster processing times will give ether coin miners an economic advantage over bitcoin miners.
Prior to the upgrade, no ether coins were being burned, Sokolin said.
“Ether’s upgrade should yield lower fee volatility and improved market efficiency,” Edward Moya, senior market analyst from Oanda, an online brokerage, told Insider.
The second-largest cryptocurrency by market value after bitcoin is ether. It was recently around $2,858, up about 1.1% on the Kraken exchange, having reached a high of about $2,880 recently.
As Ether’s supply is being reduced through “burning,” specialized addresses that have unobtainable private keys will receive them. These “Token Ghosts” cannot be used by anyone, so they will be placed outside the circulating supply.
More than $59 million worth of ether was burned after the upgrade. Ultrasound.money, a website that tracks the supply and burning of ether, says the number of remaining ether wallets is down by about 2,000.
Investors expect the price of ether to accelerate in price as more and more people buy into the Ethereum network and use it.