Ethereum blockchain network launched ‘London Hard Fork,’ its new upgrade last Thursday, August 5th, 2021. This upgrade is programmed to change the Ether mining process on the Ethereum platform and reward the platform users than the miners.
As a result of this upgrade, exchanges and other platforms announced the suspension of Ethereum deposits and withdrawal during the upgrade period. Meanwhile, experts and users expect Ethereum’s price to hike after the upgrade. However, there is no evidence to support that claim.
What is Ethereum’s London Hard Fork?
First, you must understand that the new Ethereum upgrade does not have any connection with London. The only link is the ascription of where developer’s conferences occurred for the latest software upgrade launch. The formal name for the new Ethereum upgrade is Ethereum Improvement Protocol 1559.
This new upgrade is also known as EIP-1559, and the hard fork describes an irreplaceable modification on the blockchain network. This upgrade reduces transaction fees and refunds gas prices, amongst other parameters. With EIP-1559, there will be a pre-determined price for each transaction, which automatically reduces Ether (ETH) circulation.
Effects of ‘London Hard Fork’ on Ethereum’s Price
There was no fundamental theory or philosophy for price correlation when the London upgrade happened because it is new. But users observed that Ethereum’s price moved around $2,610 while the London hard fork launched. This is another highest price happening since June.
Although transaction fees on the network will reduce because ether will burn instead of going to the miners. This may cause ether’s price inflation. Some experts believe that inflation may result from the deflationary effect, but others argued that a dip might happen to the market due to the change.
They posited that the entire Ethereum network could shift to be part of the London hard fork process. While this may be good, they argued that miners protesting against that might cause Ethereum to have two different Ethereum tokens existing on their platform.
How ‘London Hard Fork’ Affects Miners
The massive discourse around Ethereum launching ‘London Hard Fork’ affects miners leveraging the network. That’s because the former platform—before the launch of EIP 1559—ensured that miners earn legitimate ether from the bidding process (blind auction) users undergo on the network.
But with the new Ethereum upgrade, ether that is supposed to be miners becomes “burned” and is removed permanently without replacing. Some believe this is a possible deflationary mechanism because Ethereum’s price will hike, resulting from the limited supply across the network. Some persons do not submit to this hypothesis because they argued that the burned ether must surpass the available ones for that to happen.
However, miners can expect to earn a block and mint new ether through a computational process while receiving rewards from users who prioritize using their blocks. But they should not expect to earn as much as before after the “London hard fork” is fully operational.
Meanwhile, Ethereum miners may not exist in a few years due to core changes across the network. And that’s because the blind auction process on the Ethereum network becomes out-of-process. This will be Ethereum 2.0 foundation, and there will be a total replacement of network operation after the upgrade goes live.
That’s because Ethereum 2.0 network operates using a “proof-of-work” mining mechanism instead of a “proof-of-stake” mining mechanism. This makes it possible for Ethereum users to mine new coins from ethers they possess already. And this is not only significant development on the Ethereum network. It will bring substantial changes to other cryptocurrencies advancing to utilizing the “proof-of-work” mechanism.
Should Ethereum Owners Worry?
Tim Beiko, a developer with Ethereum Foundation, mentioned that Ether holders that use exchanges and wallets have nothing to worry about. He noted that users don’t need to engage in any actions except receiving instructions from their providers.
London hard fork does not affect those using hardware, mobile, and web wallets together with crypto exchanges. However, individuals that run individual nodes must have the Ethereum client’s latest version. The major highlights for the release of ‘London hard fork’ run across the “proof-of-stake” mining process involved burning ether to regulate ether circulation.