The EIP 1559 Countdown

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Elena

26/02/2023
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Those following along in the cryptocurrency space know all about Ethereum. After all, it is the second-largest cryptocurrency behind the originator, Bitcoin. And there could be a massive boost coming for Ethereum.

Where would that massive change come from? Through proof-of-stake validation and blockchain changes to ETH2. This all has to do with the Kiln Testnet Merge that happened on June 28.

What is the Countdown?

For those unfamiliar with the EIP 1559 countdown, it has to do with the new proof of stake (PoS) system that is meant for transaction validations. Mining of Ethereum will stop, and the blockchain will eliminate 99.9% of its electricity drag by cutting off that mining.

So the blockchain is on a countdown. When the countdown reaches zero, it will become very difficult to mine Ethereum going forward. Miners currently use what is known as proof of work (PoW) to validate transactions through the solving of complex mathematical puzzles.

Through the proof of stake system, users will be able to validate transactions using their own ETH tokens. Basically, the mainnet Ethereum platform will merge together with the 2.0 blockchain platform that is already using the proof of stake system.

What Happens with Proof of Stake?

The question goes from being about the EIP 1559 countdown to being about what happens with the proof of stake system. What will happen is that it will allow Ethereum to process more than 100,000 transactions per second (TPS).

The process of validation and “attestation” is not easy to grasp. There are articles out there that explain how a blockchain is basically broken down into something called an “epoch,” which is then broken into 32 different “shards.” From there, a 128-person committee of validators is chosen at random. Then, 32 committees process the validations. When two of the epochs clear validation, they become known as the attestation. At that point, no one is able to modify or tamper with that block or epoch.

To become a validator, you must have 32 ETH tokens to put up as collateral, which is done through the Ethereum blockchain. Considering Ethereum is well over $3,000 per token, that is quite a lot of money. With the money available, it is then necessary to submit an application to set up a node within the blockchain. There is also substantial computing power necessary to do this, roughly 900GB expanding at around 1Byte each day.

What is the Future of ETH?

There are many who are high on the potential of Ethereum even going forward. Some of the biggest experts in the industry have given their forecast that during 2022, Ethereum will break the $4,000 mark once again. An analyst for Bloomberg intelligence even said that it could reach a peak of $4,500.

Of course, as is the case with any cryptocurrency (Bitcoin included), it is difficult to predict with any certainty just where Ethereum will end up. There are even some outlets that are predicting that the token will end the year in the $6,500 to $7,500 range, which is similar to the bullish upswing that began last year.

That said, the beginning of 2022 brought with it a bullish downturn to the cryptocurrency market entirely, not just Ethereum. It makes one thing clear, and that is the simple fact that Ethereum isn’t going to rise simply from sentiment alone. There are others, like Coinpedia, that predict that the price will fall to around $2,500.

A Big Crash?

If there were a crash, what might that look like? Well, there is a contingent that sees Ethereum not only dropping but experiencing a big crash. Some even expect it to hit a low of $500, which would be an 85% drop from the all-time high price of $4,800.

The speculation is about whether or not Ethereum will be considered more volatile than even Bitcoin in the coming months. This has a lot to do with the transition to the technological changes mentioned above in what experts are calling “The Merge.”

The upgrade will make it not only more sustainable but more appealing in terms of widespread use. That said, experts are waiting to see how not only investors but companies are planning to build their tech within the Ethereum platform before making their predictions.

Investors will need to see an improvement in both demand and functionality on the new platform before Ethereum’s price will rise. This is for both the short- and long-term. The blockchain also has a lot more competition than it has had in recent years, as there are a number of different platforms that are filling in the gaps, all while the Ethereum team is working to transition some second-generation upgrades.

Time will tell what happens with Ethereum. Cryptocurrency, in general, is extremely hard to predict, and Bitcoin, the unquestioned number one in the industry, has experienced some of the sharpest rises and falls ever.

Ethereum isn’t going anywhere anytime soon, but the coming months and year could wind up being quite challenging or quite worthwhile for investors. No matter how things shake out, it will be an interesting development to track, one that will no doubt play a larger role in the realm of cryptocurrencies going forward in both the short- and long-term.

Conclusion

Ethereum is perhaps the most famous altcoin out there. It has proven that it is more than just one of the many cryptocurrencies to pop up in the wake of the revolutionary Bitcoin. But what does that mean for the future?

Given its peak of nearly $5,000 per coin, it shows that Ethereum is here to stay. It is one of the few high-value cryptocurrency options out there and the only potential challenger to Bitcoin that may be on the horizon.

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