An upgrade to the Ethereum network, which will reduce the amount of existing Ether tokens, could set the stage for "explosive growth" of the world's second largest cryptocurrency, some experts said.
On Friday, the developers of the Ethereum blockchain approved a major change in the way their network works, which will take effect in July or August.
Rise in the price of Ether in sight?
This network update will overhaul the current auction system of bitcoin's main rival, whereby users send tokens to pay for transactions that must be completed by miners.
Under the changes - known as EIP-1559 in Ethereum parlance - users will now send a basic transaction fee to the network itself, which will destroy or "burn" Ether tokens, reducing the number of pending tokens.
Cryptocurrency analysts have said that limiting the amount of Ether in existence, as the bitcoin system already does, will put upward pressure on the price. When combined with the recent enthusiasm for cryptocurrencies, the price could rise dramatically, they said.
"The most exciting thing for cryptocurrency traders is that Ethereum will now reduce the amount of Ether in circulation, destroying some of the tokens every time they are used to process certain transactions," said Edward Moya, chief market analyst at the company. currency Oanda.
"Ethereum's endless supply has been the least attractive part of the digital currency and now optimism is growing that the world's most used blockchain will see a major shift in retail and institutional purchases."
Justin d'Anethan, head of sales at cryptocurrency exchange Equos, said the proposed changes to the Ethereum network should not "only make the blockchain greener" but also transactions more efficient "but should also make it more scalable." Furthermore, he added: "Add to that fewer coins in circulation and you have a recipe for explosive growth."
Growth has been explosive since the beginning of the year
However, cryptocurrency skeptics argue that the surge in prices of the world's major cryptocurrencies set them up for a steep drop, as seen in the past as cryptocurrencies hit their all-time highs.
The price of Ether has increased more than 130% so far in 2021, taking it to $ 1.734 on Monday morning. But that's not the highest the digital currency has ever hit, as it hit $ 2.000 in February. In 2018, the price had risen to $ 1.400, before dropping below $ 100 in the same year.
The changes to the Ether Improvement Protocol-1559 will take effect in July or August as part of a system update known as the “London hard fork”. Have you already thought about buying your digital coins? Do you need a hand? You could use automated trading platforms such as Bitcoin system and ensure a secure entry into the world of cryptocurrencies.