Ethereum blockchain developers have agreed to reduce the outstanding among its native cryptocurrency Ether, Bloomberg reports.
Why It Matters: Scarcity is everything, as the potential shift could “spur even bigger gains in the price” of Ether.
- The reduction will also solve another problem. “Ethereum users can only estimate how much Ether will be needed for transactions to be processed, a guessing game that has spawned sites such as ETH Gas Station to help people know how much to pay.”
Price Check (8:45 a.m.):
- ETH: $1,731.70
- Market Cap: $198,910,192,822
How It Will Work: Ether Tokens will be destroyed every time the currency is used to “fuel transactions on the world’s most-used blockchain.”
Ether Boom: The cryptocurrency, like bitcoin and other digital assets, has done incredibly well in the past 12 months.
- Ether has shot up roughly 560%, compared to Bitcoin’s 430% rise.
- However, Bitcoin had a fixed supply of 21 million when it launched in 2009.
The Bottom Line: According to Tim Beiko, a senior product manager at ConsenSys (the firm leading the Ethereum upgrade), Ether’s current fee system is like going to a gas station where the pumps have different prices. The new protocol allows the network to gauge demand and fix that bug.
- It will also close the loop on a feature undermining Ether’s role in its own blockchain. After the upgrade, Ether will be the only way to pay for transactions on the network. (Previously, Ethereum mining could be funded with a credit card or another crypto.)