Ethereum 1559 code change will determine the future of Ethereum. It was recognized that changes needed to be made during the Summer of 2020 as a response to high transaction fees. Ether (ETH) is the fuel of the Ethereum platform. Every transaction the ETH currency is used to pay ‘gas fees’ to the network miners. According to Bloomberg, the proposal known as ‘EIP 1559’, will be bundled into an upgrade in July or August of 2021.
Analysts and influencers within the crypto space are excited about the returns that might be generated in July 2021, after the 1559 update. In fact, according to the four-year cycle theory, this is the year where traders may once again experience the euphoria that occurred with Bitcoin in 2017.
Some analysts predict the Ethereum Network will reach a three trillion dollar marketcap faster than Bitcoin did. And the ETH token will surpass Bitcoin as the dominant currency.
The Ethereum Improvement Proposal 1559, or EIP 1559, is slated to take the guesswork out of Ethereum network transaction fees. Currently, fees on the Ethereum network are so inconsistent that users on the network rely on sites like ETHGasStation to help them determine what their transaction fees will be at any given time.
EIP 1559 proposes a ‘BASEFEE’, which automatically adjusts to the network’s congestion level of transactions, providing a ‘market rate’ instead of users referencing variable bids to determine transaction prices. Several other solutions to ETH transaction fees are already in development and prices for these altcoins are skyrocketing.
Scarcity of ETH Tokens Will Make the Crypto Asset More Valuable
What is the significance of EIP 1559 fee model and the burning of ETH tokens? Analysts agree that it is because of increased scarcity. Increased scarcity on the Ethereum network could lead to even further price gains for ETH tokens, which have already seen massive growth over the past 12 months. A year ago, the price of ETH was roughly $200; today, that price has increased to $3400, which is an increase of roughly 1500 percent. By contrast, the price of Bitcoin has risen roughly 800 percent over the same time period.
There is little doubt that Ethereum will experience changes for the better of this blockchain platform. Doubling the capacity of transactions, fee caps and giving “tips” to miners will stabilize end user wallets. But what if hodling of ETH tokens results in shortages (less blocks to mine) and miners quit due to lack of work and pay? FInd out in July.