Ethereum, the second largest blockchain network, will undergo a technical adjustment. This will dramatically alter the process of transactions, reduce supply and increase the price of the Ethereum token.
The scheduled coding overhaul will be live Aug. 4.
Analysts said that the Ethereum Improvement Proposal 1559 upgrade is similar to a bitcoin “halving”, in which bitcoin supply was reduced by periodic adjustments. Each halving contributed to bitcoin’s rise to new heights.
According to Grayscale, Ethereum is now the most popular digital currency, with more than $12 billion in daily transactions.
Andrew Keys, managing Partner at DARMA Capital, stated that ether’s current pricing has not yet taken into account the looming software update.
He predicts that next week’s software update, along with an upgrade in the first quarter 2022, will “easily quintuple ether’s price by next year.” Thursday’s ether price was at $2,312 up 0.6%
EIP-1559, a software update that fundamentally alters the way transactions on Ethereum are processed, provides clear pricing on transaction fees in Ethereum paid to miners to validate transactions and “burns” a small number of those tokens. The tokens that have been burned will be taken out of circulation permanently.
Token burning is when miners send tokens to addresses with unobtainable private keys. The tokens are not available to the public without a private key. The currency that remains in circulation is rarer and more valuable when there are fewer tokens.