The second-most valuable cryptocurrency in the world got a significant update today. Christened the “London Hard Fork”, it will reduce transaction fees on the Ethereum platform and introduce a new way of mining the cryptocurrency.
High transaction fees have been a big problem for artists, creators minting non-fungible tokens (NFTs) and developers building decentralized apps on the Ethereum platform. “The London Fork is going for the proof-of-stake model, which will ultimately bring down the gas fees on Ethereum. Overall, for the ecosystem, it will be good news for the ecosystem of app developers, (people selling) NFTs and more,” said Toshendra Sharma, Founder and CEO of NFTically, a homegrown NFT marketplace and software-as-a-service (SAAS) platform. “People generally enter the market through Ethereum,” he added.
However, Sharma acknowledged that the changes won’t happen overnight, and it will take time for the gas fees to come down. The computational effort required to execute cryptocurrency operations is called Gas, and Gas fee is the term used for transaction fees involved in performing Ethereum transactions. Gas fees can go up to $100-150 or even more, depending on the size of the transaction, etc.
“The cost will probably go down to about one-tenth of the current fees,” said Anuj Kumar Kodam, founder of Wall.app, another homegrown NFT platform. Kodam, whose platform is built on Polygon, said other alternatives that offer low gas fees will remain in demand too.
Experts believe the new system benefits the overall blockchain ecosystem in India, much of which is built on top of Ethereum. “Even a text message sent on a decentralized application built on the blockchain is a transaction, which means high gas fees will always be a problem. And Ethereum is the platform of choice for most developers,” said a senior executive from a top crypto exchange in India.
The new update also changes how mining works on Ethereum. Mining is the process of validating transactions on the Ethereum platform and requires tons of computing power, and in turn energy. Miners are rewarded with new tokens for successfully validating transactions. With the new update, the platform puts a limit on how many miners can be rewarded for a transaction and hence reduces the overall energy usage.
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