Ethereum hard fork - final dethronement of Bitcoin?

The latest code update will take place this Wednesday Ethereum networks. The biggest change is the introduction of the protocol Proof of Stake instead Proof of Workwhich will increase its efficiency. A hard fork called "London" it is also intended to make Ether more deflationary. This is the next step to dethroning Bitcoin and replacing the leader in the ranking of the most popular cryptocurrencies in the world. 

The hard fork is another step towards Ethereum 2.0. Currently, ETH is worth approx. USD 260 billion. It comes in second in favor Bitcoin, valued roughly three times higher. However, Ethereum enthusiasts want to change that. It is clear to people in the industry that it is definitely better and more efficient than Bitcoin, but most people who are not closely related to the world of cryptocurrencies still value BTC the highest, often as the only known symbol of cryptocurrencies. 

What will change after updating Ethereum

The next update is to reduce network fees for transactions. For the ETH 1.0 chain, it will be called "Base fee" in blocks in the network, which will make the price for transactions fall. You can also set a maximum fee for yourself, so network performance will increase as the number of queries will decrease. 

There will also be some other changes that are however very detailed. They concern, among others delay, the so-called bomb of difficulty, i.e. a change that freezes the extraction of new units at a time when the network will switch from the Proof of Work algorithm to the more modern Proof of Stake. The "bomb" is scheduled to be detonated in December 2021, because that is when ETH will switch to a new consensus algorithm.

Long-term Effects for Ethereum

The changes are expected to bring positive effects for the ETH course. The cryptocurrency will have better foundations and increase its capabilities. It will also increase the possibilities of using the still fashionable DeFi.

- After the London hard fork, there will be more transactions in the ETH network, because it will be easier to scale costs, and some of the fees will be incinerated. So the more popular ETH is, the more coins will be burned, i.e. there will be lower inflation, and after switching to Proof of Stake, it may even deflation, because the fees may be higher than the issue. This gives a chance for ETH to become the so-called sound money, just like Bitcoin, and maybe better, because it can have negative inflation - predicts Piotr Misiurek, who runs the portal Understand Bitcoin during the CMC Markets podcast.

Brian Kelly

The largest companies on the market, such as a well-known trader, also intend to continue investing in ETH Brian Kelly. 

- I believe that the transition from Proof of Work to Proof of Stake in the Ethereum protocol and the reduction of supply will have a bullish impact on the price of ETH. Ether from a cryptocurrency with an unlimited supply has a chance to become a deflationary currency. This will fuel the narrative about the importance of ETH. In addition, a lot is already built on Ethereum: DeFi, NFT and a lot more. In my opinion, 2021 will be a breakthrough for ETH and will be good for its price - emphasizes Brian Kelly in CNBC.

The increase in the price of ETH may also be influenced by the fact that many investors have large cryptocurrency packages that they do not intend to get rid of. This can be partially checked in the Launchpad panel, which shows that 6,5 million ETH is currently blocked in the staking contract. That's 5,57% of the entire ETH supply worth more than $ 15 billion. We should also add a large group of investors who do not block the coins, but keep them "for years" and do not intend to sell them yet. They also belong to the so-called "Strong hands"which will not change the attitude even during big price movements.