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What is Ethereum Improvement Proposal? How will it change India?
Often considered second to Bitcoin, cryptocurrency Ethereum has undergone a massive transformation and increased its competitive edge.
With the launch of its latest update, Ethereum Improvement Proposal, EIP-1559, the cryptocurrency has opted for some significant improvements, drawing the attention of crypto investors.
In February 2021, Ether (an alias of Ethereum) made its mark as the dominating financial infrastructure reportedly settling over $12 billion transactions every day.
Seasoned investors claim that this shift is expected to increase the price of Ethereum over 3 times in the next 3 quarters. This is also subject to another upgrade expected to be launched in 2022.
Why was this upgrade essential and how does this upgrade make investors want to buy Ether?
The effectiveness of the software upgrade can be summarized with these three major changes that boost the transaction process of Ethereum:
1. Transparency in transaction fees
Before
If someone wanted to make transactions using Ethereum, a ‘gas fee’ was charged. This was a fee paid to crypto miners to process these transactions.
These transaction fees are similar to the delivery fees you pay to get food delivered to your doorstep, the fees paid for booking tickets online instead of waiting in line, or the fees you pay when you withdraw money from the nearest ATM. It’s the price paid for convenience.
While transaction fees are extremely legitimate, Ether transactions involved a ‘gas fee’ which varied for each transaction, making it highly volatile. As a result, there was no way of knowing your transaction fee for Ethereum beforehand, and thus people ended up paying huge sums as transaction fee alone.
After the EIP-1559 upgrade
There will now be a fixed ‘base fee’ to process any transactions using Ether. Users have the option of paying a tip to speed up the process as well.
2. Increasing demand
Anything rare is instantly more valuable. Following in the footsteps of bitcoin “halving”, Ethereum’s upgrade includes the “burning” feature. After each transaction, a small amount of Ether will be permanently taken out of circulation. This will create a shortage of Ethereum in the network, increasing its prices and demand.
3. Increasing volume of transactions per block
Ethereum operates on a blockchain mechanism where transactions are settled in batches. This upgrade has doubled the number of transactions that will be processed per batch. This would increase the volume of settlements, making transactions faster than before.
What does this upgrade mean for Ethereum prices in India?
Long-term investors see a lot of potential in Ethereum after its latest upgrade. The value of holding Ether has become apparent with this upgrade, especially with the introduction of a fixed transaction fee. Cryptocurrency exchanges in India have witnessed a steep rise in Ether’s prices, ever since the upgrade. Ethereum is definitely giving tough competition to Bitcoin prices.
Through its “burning” feature and doubling the volume of transactions per block, Ethereum has managed to prove itself to be a reliable cryptocurrency that offers ease of transactions to potential investors.
If this seems like an investment you want to make, choose the best cryptocurrency exchanges in India like ZebPay to enjoy hassle-free crypto transactions. Stay tuned for more informative articles that make your crypto journey easier.
Sources:
https://www.thehindubusinessline.com/money-and-banking/ethereum-improvement-proposal-all-set-to-bring-major-change-to-crypto-world/article35803996.ece
https://economictimes.indiatimes.com/markets/cryptocurrency/major-ethereum-upgrade-set-to-alter-supply-fix-transaction-fees/articleshow/84882506.cms?from=mdr
https://gadgets.ndtv.com/finance/ethereum-price-history
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