What is Ethereum's London Hard Fork?
Do you remember the rectangle school bag that you used to carry to school as a kid, but then upgraded to sling bags or laptop-style bags when you joined college? Both these bags served the purpose of carrying books. However, the earlier one would never accommodate more books if you had to carry them, plus the fashion and style changed according to the trend too.
The same is the case with Ethereum. Certain issues were faced by those working at the top of Ethereum which resulted in Ethereum 2.0, the London hard fork.
Understand The Ethereum's London hard fork
Ethereum is the second-largest cryptocurrency worldwide. It is the biggest competitor of Bitcoin, the largest cryptocurrency across the globe. Ethereum is a cryptocurrency with an unlimited supply. Due to this reason, it is called inflationary cryptocurrency. It is symbolled as ‘ETH’.
Hard Fork occurs when the majority of stakeholders of any cryptocurrency blockchain community decide to permanently change the governing rules and technology. The stakeholders include minors, currency developers, and investors.
London hard fork is the name given to the upgraded blockchain network of Ethereum. The word ‘London’ is there because the conferences of developers were in London. London hard fork constitutes a set of five various Ethereum Improvement Proposals. These five EIPs are EIP-1559, EIP-3198, EIP-3529, EIP-3541 and EIP-3554. These different EIPs have different purposes. As the name suggests, these proposals are aimed at revolutionizing the Ethereum network.
London Hard Fork will switch the Ethereum blockchain community to Proof-of-Stake (PoS) from the Proof-of-Work blockchain. According to the PoS concept, the mining power of stakeholders depends on the number of coins they hold. More the coins, more the power, and vice versa.
Anyone from the Ethereum blockchain community can propose Ethereum Improvement Proposals. Though, the acceptance is in the hands of stakeholders of the Ethereum blockchain community.
Benefits of Ethereum’s London hard fork
The number of transactions per second increased dramatically post the upgrade. With the updated version, miners can not receive income from transaction fees. Reduced supply due to this reason gave an uplift to the Ethereum currency. Now, blockchain users can easily presume the transaction fees. Certainty of transaction fees is a big benefit for small investors and those who trade often. Also, the reduced costs will tend to attract more investors. This will let the price increase in the long term.
One of the parts of the London hard fork, EIP-1559, is aimed at boosting the speed and improving incentivization for mining of Ethereum.
Effect of the London Hard Fork
This upgrade reduces the overall volatility in the transaction fees, which has been a pain point for everyone involved with Ethereum directly or indirectly. The Ethereum community has taken a giant leap towards Ethereum 2.0 which is expected to hit the market by the year 2021 and the upgrade will pave the way for the transition.
The investors will have a mammoth benefit in the long term as the cost of the Ethereum blockchain goes down, and the adoption and demand will always be rising, ultimately pushing the price of the token to rise higher and higher.
The London Hard Fork was introduced to make currency trading more smooth and efficient. The London Hard Fork changed the way the transaction fees were calculated for trading this cryptocurrency.
Ethereum’s London hard fork is an updated version of Ethereum cryptocurrency. It is introduced to ensure smooth functionality. It is beneficial for investors in the long term. This cryptocurrency is strong enough to challenge Bitcoin and is already ahead of other cryptocurrencies traded all over the world.
Frequently Asked Questions Expand All
The answer is subjective. Hard Fork occurs when the majority of stakeholders of any cryptocurrency blockchain community decide to permanently change the governing rules and technology. It can be good or bad. Some might have been taken negatively for a time but good for the long-term.
Ethereum 2.0 is an updated Ethereum cryptocurrency. It came with changes like scalability and predictable transaction costs.
London Hard fork comes with significant changes. It overcomes the challenge of uncertain transaction costs which will be predictable.