If you are interested in investing in one of the cryptocurrencies called Ethereum, this is good news! The news of a London hard fork will benefit Ethereum owners. So, what is a hard fork and how can it benefit you?
What is a London hard fork?
When it comes to hard forks, we should first understand the origins of cryptocurrencies through the blockchain system. Cryptocurrency is a digital asset that is developed through a blockchain system (supervision between computer networks in the world), which is a combination of computer systems that can control and verify every transaction to ensure its security. Each blockchain has a system in the formation of each code, mining activity, and transaction procedures respectively. In order to be part of the network, each party must use a blockchain that can adapt to existing protocols. Well, this is why the hard fork happens, namely when there is a protocol update related to security and transactions on the network. Hard forks occur so that previously existing codes can be updated in order to increase the security and convenience of transactions in the future.
For example, recently there was a London hard fork that was meant for the Ethereum type cryptocurrency (ETH). Every year the Ethereum network makes periodic improvements to increase the effectiveness of their network. In 2020, Ethereum was scheduled to make improvements to its network security and transaction efficiency. The upgrade was called The Berlin Hard Fork after the German capital, where the first Ethereum DevCon was held. However, due to Ethereum node centralization problems, this activity was forced to be cancelled. The cancellation of the Berlin hard fork formed the basis for the London hard fork, also known as the proposed renewal of EIP-1559, which is currently a big topic of discussion for Ethereum fans.
London hard fork update function
One of the most contentious issues about investing in Ethereum assets is the slow processing time and the high costs of doing a transaction. With the London hard fork, Ethereum not only aims to improve its network and security, but to also update the Ethereum transaction system to increase the transaction speed and lower the transaction costs. To achieve this, the implementation of EIP-1559 will create new transactions or mining which does not require validation by all networks.
The Ethereum mining auction system makes the transaction costs very expensive. With the London hard fork update, one of the things that will be changed is the standard mining fee leveling called the Base Fee. This will change the auction system where miners will only receive the highest price from users who want to get Ethereum assets. From there, the transaction fees will be more stable, making it easier for Ethereum users to transcat Ethereum.
When is the London hard fork active?
Initially, the release schedule for this update was in July 2021. However, the trial for activation of the London hard fork only started June 24, 2021 which pushed back the release schedule to August 4, 2021. Are you curious about whether Ethereum will be updated successfully this time?
Impact of the London hard fork on Ethereum
In addition to reducing transaction costs and increasing security, the London hard fork aims to make the Ethereum network more reliable. Thus, this will increase the appeal of this cryptocurrency to many enthusiasts. Once EIP-1559 has officially started running, there will be a reduction in the supply of Ethereum tokens which means their value will go even higher in the future. According to the law of supply and demand, the lower the supply and the higher the demand, the higher the price is likely to be in the future.
Does the existence of a London hard fork guarantee an increase in the demand for Ethereum? Keep in mind that this update reduces transaction fees which makes it more profitable for investors so it is likely that the demand for Ethereum tokens will increase even more. Moreover, Ethereum will be supported by an increasingly sophisticated security system which will also make this network more trusted by the market.
Tokenomy supports this hard fork and will temporarily close the wallet during the hard fork period which will take place during August 5, 2021. Read here for more information.