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Crypto coin outperforming bitcoin is about to see supply reduced

Second-largest cryptocurrency has surged in past year.
Image: Bloomberg

Ethereum blockchain developers approved one of the biggest changes to the network since its inception in 2015, a shift that could spur even bigger gains in the price of its native cryptocurrency Ether.

The move will reduce the amount of outstanding Ether by destroying some of the tokens every time it’s used to fuel transactions on the world’s most-used blockchain. Known as EIP 1559, the change solves a current problem: Ethereum users can only estimate how much Ether will be needed for transactions to be processed, a guessing game that has spawned sites such as ETH Gas Station to help people know how much to pay. EIP 1559, which will become part of an upgrade in July or August, will embed an average price into the network itself making the guessing game obsolete.

The reduced supply of Ether will likely lead to rising prices as demand for the coins increases, said Eric Turner, director of research at Messari, a cryptocurrency analytics firm.

“This is probably one of the biggest milestones we’ve seen recently,” he said. Until EIP 1559 goes into effect after being approved Friday, the supply of Ether was theoretically infinite, leading to criticism that its underlying monetary policy was weak and inflationary. “Now, they’re actually controlling inflation on Ethereum” and “in some cases you’re looking at negative inflation so it’s definitely important,” Turner said.

Ether has seen an already incredible price gain in the past 12 months, along with Bitcoin and other digital assets. Ether has risen about 560% in the past year, while Bitcoin is up about 430%, according to data compiled by Bloomberg. Unlike Ether, Bitcoin has had since its start in 2009 a fixed supply of 21 million coins that will ever be created. That difference has led critics of Ethereum to say it shouldn’t be viewed as a similar digital currency as Bitcoin.

Tim Beiko, a senior product manager at ConsenSys who’s leading the protocol team implementing EIP 1559, compared the current fee environment in Ethereum to a gas station where each of the four pumps has a different price. Going forward, “we’ll gauge demand for the network and we put that average price as part of the network itself,” he said. EIP 1559 “fixes a bug in the economics of Ethereum we’ve known about from the start.”

The proposal also will change a strange feature in Ethereum that no one really saw coming. Users can now pay an Ethereum miner to process their transaction with a credit card or another cryptocurrency, undermining Ether’s role in its own blockchain, Beiko said. EIP 1559 makes Ether the only way to pay for transactions on the network.

“It cements Ether’s role in the ecosystem,” he said.

© 2021 Bloomberg

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Watch this space as South Africa becomes the leader in Crypto ETF’s. …..our boykies are smart, they know how to corner a market – look at Elon Musk, Chris Barnard, Nelson Mandela and the Oppenheimers…to name but a few! The SA crypto Kings shall remain nameless but we know who they are…go for it boys, timing is everything! Good luck.

Can only be good for ETH and the hundreds of businesses built on its platform!
Trades and movement of them now cost way more than the old fashioned banking industry!!

Bitcoin, and all cryptocurrencies, are nothing more than a farce, a Ponzi scheme waiting to collapse. It has no value other than the belief that people place in it having value. Once that belief collapses so will the value of Bitcoin and people will lose a lot of money. How can something that can be created out of ‘thin air’ (Bitcoin mining) have any value, other than a perceived value by people falling prey to other people mining Bitcoin and continuing to sell their scam? Once people realize the scam that underlies the cryptocurrencies their values will drop to zero and there will be many depressed people left ‘holding the bag’. It is only a matter of time before Bitcoin drops to zero, like all other cryptocurrencies.

At least with a fiat currency you have the backing of the national government that issues the currency. Sure, with the USA printing trillions and trillions of dollars out of thin air, inflation is a risk. But at least those dollars are backed by the faith in the US Government and their tax base, whereas cryptocurrencies are backed by nothing other than a Ponzi scheme of people selling other people a dream based on a farce.

I have zero faith in cryptocurrencies and will be staying far away, not even risking one dollar of my investment capital. I hope that when the Ponzi scheme collapses, as it will, that the people left holding the bag can afford the losses they will suffer.

And yes, I fully expect numerous negative comments on my position, but go right ahead, I can take it ……

End of comments.

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