A New Reason to Consider High-Flying Ethereum Is Emerging

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The cryptocurrency known as Ether, which transacts on the Ethereum blockchain, is the second-largest in the space after Bitcoin.

While Ether has been on a tear of its own of late, outperforming Bitcoin along the way, that run may not be over. In fact, it may be getting some assistance in the form of reduced Ether supply.

“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,” reports Matthew Leising for Bloomberg.

Examining Ethereum

“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,” according to Bloomberg. “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.”

Ethereum is an open-source, blockchain-based distributed computing platform that can support smart contract functionality.

That’s a complicated way of saying that Ethereum not only makes a cryptocurrency called Ether possible, but can also support the launch of new cryptocurrencies and make it possible to crowdsource funding for new projects.

The simplest way to think about Ethereum is to compare it to something you probably use every day: your mobile phone. If you have an Android or iOS phone, you have apps that can perform a wide variety of functions from ordering an Uber to mapping a route across town.

What gives Ethereum an edge against Bitcoin is its implementation of smart contracts, which allows developers to run decentralized applications, or dapps, directly on the Ethereum blockchain. Although the possibilities for smart contracts are nearly endless, a few dominant use cases have emerged.

“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,” concludes Bloomberg.

For more news, information, and strategy, visit the Crypto Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Ethereum Is About to Surge as Supply Is Cut!

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Upwards momentum

Bitcoin has had an incredible run over the past year. However, the second-most popular cryptocurrency Ethereum has actually outperformed it. ETH is up 811% compared to BTC’s 560% return over the past 12 months. Now, a culmination of two factors could help Ethereum sustain its outperformance.

Ethereum market potential

The collective value of all the Bitcoin in the world recently surpassed US$1 trillion (CA$1.27 trillion). Experts believe the market value could surge 10 times higher, as BTC siphons off market share from gold.

Unlike BTC, Ethereum is not digital gold or a store of value. Instead, it’s a token used for decentralized applications. Think of it as the fuel for a global virtual computer. That means Ethereum is akin to digital oil, rather than digital gold.

And the applications built on the Ethereum network have multiplied rapidly. Over the past few years, developers have replicated the traditional financial sector on this network. Users can now generate a fixed return on their savings, offer loans, and borrow money on the Ethereum blockchain.

The most popular application on Ethereum is the Non-Fungible Token (NFT). Users have been using this application to buy and sell digital art. The National Basketball Association (NBA) recently used this technology to sell collectible videos, game highlights, and stats on its NBA Top Shot marketplace.

As the utility of the network grows, Ethereum should become more valuable. However, the creators of Ethereum are close to updating the network to limit supply and make each unit even more valuable this year.

Supply shock

An upcoming update to the Ethereum network (called EIP 1559) will burn or destroy a set amount of ETH tokens. This should reduce the number of outstanding ETH over time, making each ETH more valuable as a consequence.

Growing demand from expanding applications coupled with this update that eliminates supply could make Ethereum skyrocket in 2021.

How to buy Ethereum

Canadian investors can buy and hold Ethereum directly on certain platforms such as Wealthsimple. However, these direct holdings do not qualify for the Tax-Free Savings Account (TFSA). Canadian investors may also be uncomfortable with the risk of holding digital assets directly.

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Instead, you could bet on a proxy. Most crypto mining stocks, such as HIVE Blockchain, have Ethereum reserves on their balance sheet. There’s also a close-ended fund that tracks the price of ETH directly — The Ether Fund. Over the three months, these proxies have delivered 61% and 210%, respectively.

Adding these to your TFSA could be a great way to add some hyper-growth potential with no tax consequences.

Bottom line

There’s growing evidence that blockchain technology does have useful applications. Bitcoin is being used as digital gold. Meanwhile, Ethereum is being used as fuel for digital applications. While adoption grows, Ether developers are set to implement an upgrade that could cut supply. The price could skyrocket by the end of 2021.

Consider adding a small portion of your portfolio to this arguably speculative asset to avoid missing out.

The post Ethereum Is About to Surge as Supply Is Cut! appeared first on The Motley Fool Canada.

Ethereum Berlin Upgrade Ready to be Deployed on April 14

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Developers working on the latest Ethereum upgrade, Berlin, have announced that it’s ready to roll out.

Lead developer Tim Beiko has posted an update regarding the upcoming Ethereum Berlin network protocol upgrade. Deployment to the mainnet is slated for April 14.

Before that happens, the code must be updated on Ethereum’s testnets with the first, Ropsten, rolling out on March 10.

The upgrade follows the Istanbul and Muir Glacier upgrades and is scheduled to go live on the Ethereum mainnet at block 12244000.

Node operators will need to update their client software before the mainnet launch but ETH holders do not need to take any action. It warned of potential scams targeting popular crypto wallets such as MetaMask or Ledger.

Berlin is coming

The next @ethereum upgrade is going live soon – in two days on the first testnet, and April 14th on mainnet. Read all about it here https://t.co/A3eYYFZq3X and keep an eye out for other projects' cross-posts coming out shortly — Tim Beiko | timbeiko.eth (@TimBeiko) March 8, 2021

EIPs Galore

The Berlin upgrade introduces a number of Ethereum Improvement Proposals (EIPs) to the network. The Ethereum Cat Herders have posted a detailed summary of what each one entails.

EIP-2565 lowers the gas cost of a previous cryptographic algorithm-based proposal. On the other hand, EIP-2929 increases gas costs for certain ‘opcodes’, preventing network spam. The Cat Herders elaborated:

“The rationale for raising these gas costs is mitigating the largest remaining DoS attack vector in Ethereum. It is also a stepping stone towards bounding witness sizes in the context of stateless Ethereum.”

EIP-2718 introduces a new transaction type that is an envelope to enable easier support for multiple transaction types. It added that in the future ‘fun features’ like someone else paying for gas or multi-signature transactions can be added more easily.

EIP-2930 adds a transaction type to mitigate some of the gas costs associated with EIP-2929.

The highly anticipated EIP-1559 isn’t included in the Berlin upgrade. This proposal alters the network fee mechanism by burning some of the gas. It should ship with the following London upgrade in July at the earliest.

Ethereum Price Outlook

Ethereum prices are normally unaffected by protocol updates like Berlin. ETH has retreated 3.5% since its daily open, trading at $1,806 at the time of press.

Over the past week, ETH has gained almost 20% in a near full recovery from the market correction which dropped prices as low as $1,300. Support currently lies at $1,730 while there is resistance at the $1,850 level.

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