It’s Wisly Wednesday, which means it’s time to catch you up on all things crypto from this past week! We focus on the big moves within the world of blockchain and cryptocurrencies to keep you up to date with an industry traveling at light speed.
Ethereum set to reduce supply
Ethereum developers have approved one of the biggest changes to their network since its inception in 2015, a shift that could prompt even larger gains in the price of its native cryptocurrency, Ether.
Ethereum is the world’s most-used blockchain, but gas fees on the network continue to be a problem. Currently, users can’t accurately predict how much Ether will be required for their transactions to be processed, a guessing game that has spawned sites such as ETH Gas Station to help figure out amounts payable. EIP 1559, which will become part of an upgrade scheduled for the “London” hard fork in July, will embed an average price into the network itself, ending the estimation game.
The move will also reduce the amount of outstanding Ether by destroying tokens every time it’s used to fuel transactions. Eric Turner, director of research at Messari, a cryptocurrency analytics firm, says that the reduced supply of Ether will likely lead to prices spiking as the demand for the coins grows.
Ether’s supply was theoretically infinite before this scheduled update, leading to critics viewing its underlying monetary policy as weak and inflationary. Inflation will be now be controlled on Ethereum, and the hotly awaited upgrade to the network will result in ETH becoming a deflationary asset. This is due to ETH transaction fees either being burnt or deposited into a long-term mining pool once the upgrade comes into effect.
An unpredicted strange feature within Ethereum is that users can now pay an Ethereum miner to process their transaction with a credit card or another cryptocurrency, undermining Ether’s role in its own blockchain. EIP 1559 will make Ether the sole payment method for transactions on the network and cement its function in the ecosystem.
Cardano Goes for Full Decentralisation
Less than a year after launching its IOHK-owned network of federated nodes, Cardano is on schedule to reach full decentralisation at the end of this month. At which point, the already established network of over 1,800 community pools will be responsible for producing all new blocks.
Cardano is on track to get out of the realm of centralisation on March 31st. With the so-called D (=0) day approaching, IOHK, the company behind the popular blockchain project Cardano, published a post reflecting on their latest milestone development.
Is ADA the next Bitcoin?
While the Cardano community patiently wait for D=0 day, the native cryptocurrency has been on a roll since the turn of the year.
ADA skyrocketed to a new all-time high following a 730% surge. The asset has since retraced slightly but remains at an impressive price. ADA’s price surge naturally impacted their market capitalisation as they surpassed other altcoins like Ripple and Polkadot to currently be the 5th largest cryptocurrency by market cap, closely behind Binance Coin.
Simon Peters, eToro’s resident cryptocurrency expert, says clued-in investors are searching for alternatives to Bitcoin that would allow them to get in on the ground floor of the next big boom. In their search for the next Bitcoin, investors are eying cheaper tokens like Cardano’s ADA, IOTA and Tron. We anticipate the hunt for the next big thing to intensify throughout the year as the market widens and more coins gain their own followings.
US Senate Approves $1.9T Stimulus Plan
The US Senate passed President Joe Biden’s landmark $1.9 trillion Covid-19 relief package on Saturday, a significant step in the bill’s evolution and a possible positive development for cryptocurrencies.
It now heads back to the House, which will need to approve Senate changes to the legislation before going to the president to sign into law. The package would provide $300 weekly unemployment benefits, send $1,400 payments to certain Americans and direct $350 billion to the state and local governments.
The stimulus package will likely boost the price of cryptocurrencies in the near-term. Especially if, as forecast, many will use their stimulus checks to buy cryptocurrencies.
Crypto investors have been hedging their bets for months that a government and central bank cash injection is on the card. The funds are a way to combat an economic slow caused by the coronavirus pandemic and inevitably lead to inflation, which would be beneficial for crypto.
The stimulus calls into question the Federal Reserve’s independence. To prevent short-term economic ruin, they have been printing money carelessly and opened themselves up to criticism about the mountain of debt these spending sprees are leaving in their wake.
The markets reacted in bullish fashion to the news, with the price of Bitcoin and Ethereum both moving back into positive territory after news of the bill’s passage broke.