The most significant change in the blockchain Ethereum since 2015 that went into effect Thursday shows the network is well-coordinated to make an even bigger upgrade to reduce its energy use by 99%, according to its inventor Vitalik Buterin.
The world's most advanced blockchain will update its software, known as the London hard fork, which includes a fee reduction feature called EIP 1559. The fee cut already netted $2 million worth of its native crypto Ether in just a few hours after taking effect, according to tracking website ultrasound.money. If there was a market pressure, that could increase the price of Ether into 2015.
In an interview with Bloomberg News from Singapore, Buterin said that London was the most important part of London. The Ethereum expansion in London is 'proof that Ethereum ecosystem can be used to make significant changes.
Both Ethereum and the better-known rival Bitcoin operate using a proof-of-work system which requires a global network of computers running around the clock. Software developers at Ethereum have worked for years to transition the blockchain to what is known as a proof-of-stake system, which uses a completely different approach to secure the network that also removes the carbon emissions issue. That change to ETH 2.0 is being performed by a process called the merge and could happen shortly in 2022, but as soon as end of year it is expected, Buterin said.
The London hard fork 'definitely makes me more confident about the merge, he said.
Bitcoin has seen an already incredible price gain in the past 12 months, along with Ether and other digital assets. Bitcoin has tripled in the past year, while Ether has increased by about 590%. Those gains come even after both coins fell to about half from their all-time latest highs in April.
Part of the price surge on Ether is due to the explosion of non-fungible tokens, or NFTs, which are digital files whose authenticity and scarcity can be validated with a blockchain like Ethereum. NFTs have surged in popularity this year, driven by deals including the record selling $69.3 million sale of 'Everydays: The First 5,000 Days' by digital artist Beeple and a video of a LeBron James dunk. Now everyone from the International Olympic Committee, art galleries to Twitter Inc. is offering the digital tokens.
The change on Wednesday will also put Bitcoin on a closer path to Ethereum’s operations? Since 2009 Bitcoin has had a fixed supply of 21 million coins that will ever be created in contrast to Ethereum. That difference has led critics of Bitcoin to say it shouldn't be viewed as similar digital currency as Ethereum.
Buterin had initially a cap on the amount of Ether that could be created in his 2013 white paper that described the creation of Ethereum. There was room for change, however, and the idea of moving to proof of stake was always the plan. Buterin said proof of stake would eventually change the economics of Ether, buterin said.
'There wasn't really the possibility of making very durable and long-term commitments to the monetary policy, he said of his original vision. Then he attended an economics and computation conference at Cornell University in 2018 where the inefficiency of first-price auctions was discussed. Where the highest bidder wins an auction, and how Ethereum and Bitcoin have structured their fee markets. Ethereum has been removed from that system since EIP 1559.
Another important change on Thursday is that the block size of Ethereum is now variable. Previously, the amount of transactions that can be processed within one block was fixed, meaning that users had to wait for their transactions to get processed when there was high network demand. Blocks can now grow or shrink to match the amount of incoming transactions.
'Now it is much easier to send a transaction that will be included in the next block and that's very important to the user experience, Buterin said.