Eth’s London Upgrade and the US Government make it a big week for the Cryptocurrency Industry
ETHEREUM LONDON UPGRADE
The second week of August was a good one for the crypto markets. Social media was immediately full of people calling it ‘officially a bull market’, although we think it’s still a bit too soon to say that.
But after a long, frustrating period of inaction, Bitcoin has managed to firmly rise above the $45,000 price tag for most of the week (even clipping above R 700,000 for a while). That’s a solid 13% gain over the week before, and there are hopes and expectations of more to come.
Nearly all coins had a good week but Ethereum in particular is showing its true class and pedigree. Not only did the value of Ether climb by 16.75% at the time of writing, but it executed a vital hard fork on the Ethereum protocol that experts are speaking of as a ‘game-changer’.
Author: Jeremy Daniel
A hard fork is an unchangeable permanent modification on the blockchain, which is a backward-incompatible upgrade, meaning that miners have to download the London Hard Fork if they want to continue using the Ethereum network.
CNBC explains that ‘If you think of Ethereum like a highway, London is adding a few lanes to tamp down traffic and is standardising toll prices.’
The takeaway from the London upgrade for casual viewers is that it is fixed to the blockchain that involves destroying or “burning” ether coins. Many assumed that the name London must be associated with the famous bridge of the same name that ‘is burning down’. In fact, all the hard fork names come from the cities where the Ethereum Devcon international developer’s conference has most recently been held. Next up will be Shanghai hardfork. .
Nevertheless, the burning of ether is a significant change and is meant to provide a deflationary mechanism that will provide price stability.
From this point on the transaction fees will be determined automatically according to supply and demand trends, in the hope that this will lessen the volatility in the current system.
“What will happen is that the base fee will be burned. Since this fee is paid in “ETH, more ETH will be burned as transactions occur. It is good news for ETH holders as this fee burn could lead to ETH inflation. But this doesn’t mean ETH will go deflationary. It is just a new theoretically deflationary mechanism, something Ethereum has lacked till date,” says Hitesh Malviya, the founder of itsblockchain.com.
SENATE HEARINGS ON CRYPTO
In the first real acknowledgement from US authorities that cryptocurrencies are not just a fad that will disappear sometime soon, the Senate held a fiery date over the first set of legislative ideas that seek to ensure a structure for government taxation of crypto assets in the United States.
It was part of the larger bi-partisan Infrastructure bill that recently passed the senate, although that particular crypto amendment was blocked for obscure Senate procedural reasons that involved $50 billion in unrelated military spending someone else was trying to add to the bill.
But it was the first real attempt at defining what is set to be a long relationship between the crypto community and the United States government.
The New York Times brilliant columnist Ezra Klein wrote a long, thought-provoking article on the events of the past week and he had some insightful comments around what the future of cryptocurrency is starting to look like. He believes that crypto has moved beyond currency and into the kind of infrastructure that could potentially be the next digital economy: Web 3.0, as some are calling it.
“Once you have crypto networks up and running, with currencies pulling in users, you can build all kinds of things on top of them. So the second phase of crypto has followed from the first: Now that there really is digital money, where anyone can verify the transactions, shouldn’t there be truly digital financial services, built around contracts anyone can write, enforced by code rather than banks or law?”, Klein writes.
This would be a game changer for content creators, who have been failed time and again by an internet that rewards access to entertainment without rewarding the creator. It’s been simply too easy to lift, copy and enjoy original work without paying for it. WEB 3.0 changes that.
“If the original internet lets you easily copy information, the next internet will let you easily trade ownership of digital goods. Crypto lets you make digital goods scarce, which increases their value; it lets you prove ownership, which allows you to buy and sell them; and it makes digital identities verifiable, as that’s merely information you own. Together, they unlock the potential for a true economy for digital goods, where creators actually get rewarded for what they make.”
Just one more reminder that we are all still very early to the crypto space and that this could be one of the biggest investment opportunities of the future for those who could see what was coming.
Author: Jeremy Daniel