Ethereum Network Upgrade That Will Destroy Coins Could Cause “Explosive Growth” in Ether Price, Experts Say | Currency News | Financial and business news

A change in the Ethereum network that will reduce the limit on the amount of existing Ether tokens could pave the way for “explosive growth” in the world’s second largest cryptocurrency, experts said.

On Friday, the developers of the Ethereum blockchain approved a major change in how the network works, which will take effect in July or August.

It will overhaul rival Bitcoin’s current auction system, in which users send tokens to pay for transactions to be made by miners.

As part of the changes – known as EIP-1559 in Ethereum parlance – users will now send basic transaction fees to the network itself, which will destroy or “burn” the ether tokens, reducing the number in circulation.

Cryptocurrency analysts said limiting the amount of existing ether, like the Bitcoin system does, will put upward pressure on the price. Combined with the recent craze for cryptocurrencies, the price could rise sharply, they said.

“What is most exciting for cryptocurrency traders is that Ethereum will now reduce the amount of Ether in circulation by destroying some of the tokens whenever it is used to process certain transactions,” said Edward Moya, chief market analyst for currency firm Oanda at Insider.

“Ethereum’s endless supply was the least appealing part about it and now optimism is growing that the world’s most widely used blockchain will see a major shift in retail and institutional buying.”

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Justin d’Anethan, sales director for cryptocurrency exchange Equos, told Insider that the proposed changes to the Ethereum network should “not only make the blockchain greener” by making transactions more efficient, “but should also make it more scalable “.

He added, “Add to that fewer coins in circulation, and you have a recipe for explosive growth.”

However, crypto-skeptics claim that the surge in the prices of the world’s major cryptocurrencies has taken them sharply down, as seen in the past.

The price of ether has risen more than 130% so far in 2021, taking it to $ 1,734 on Monday morning. But that’s a far cry from a peak of over $ 2,000 reached in February.

It topped $ 1,400 in 2018 before dropping below $ 100 later that year.

The changes to the 1559 Ether Improvement Protocol are expected to come into effect in July or August as part of a system upgrade known as the “London hard fork.”