Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Ethereum Could Soon Steal Bitcoin's Thunder as Inflationary Hedge

CryptocurrencyJun 04, 2021 04:58PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Yasin Ebrahim

Investing.com – Ethereum is still well below its May highs, but a hotly anticipated update expected in the coming weeks could pit it against bitcoin as a destination for institutional dollars seeking a hedge against inflation.

“The main goal of the 1559 Ethereum improvement proposal, or the London fork [expected to kick off July] is to change how users make transactions on Ethereum, and we believe that it should be very positive for the price of ETH,” Amber Ghaddar, PhD, Founder AllianceBlock said in an interview with investing.com.

The Ethereum community is betting big that this fork will give ether, or ETH, the token used to fund operations on the Ethereum network, that all-important scarcity factor that could see it ride the same wave of institutional demand that bitcoin has enjoyed.

At its core, the update will divide transaction fees on Ethereum into base fees and tips. The base fees will be burned, or destroyed, cutting the amount of the ETH in supply, keeping inflation in check.

“There’s hope the London fork coming in July is going to make ether a deflationary asset,” Ghaddar said. “Some ETH is going to be burned … [potentially] making it more attractive as a store of wealth, allowing Ethereum to expand its target market.”

While the deflationary feature of the improvement proposal has many excited, the high fees on Ethereum - as a result of congested network – has kept scalability on a short leash. Ethereum has been the go-to protocol for developers, raking in the bulk of Decentralized Financial, or DeFI activity, but rivals including Cardano, Binance and Polkadot are providing competition.

While the London fork will make the Ethereum “highway” wider, easing congestion and helping to reduce fees, it isn’t the real solution. The real solution is to build more highways, and the Ethereum 2.0 holds the key.

“The London fork is going to make the highway wider, but you need to build more highways, and this is only going to occur with Ethereum 2.0,” Ghaddar added.

The timeline is uncertain as to when the full transition to Ethereum 2.0 will be completed, with some touting early 2022 as a potential timeline.

The importance of getting a handle on spiraling fees holds sway for the wider adoption of Ethereum particularly for the masses, who have been left behind.

“The whole idea of blockchain is to decrease fees, and to democratize access to capital, and we are very far from this at the moment, because the issues that we have, due to the way the blockchains are set up,” Ghaddar added.

Ethereum Could Soon Steal Bitcoin's Thunder as Inflationary Hedge
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (7)
Ominous Owl
Ominous Owl Jun 05, 2021 1:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
False Dichotomy. Building on the premise as if there are only two options competing against inflation hedge.
Jon Bal
Jon Bal Jun 05, 2021 1:03AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
what school of logic or even maybe econ says an intangible asset is an inflation hedge? (serious question..school project)
Johan Zijlstra
Johan Zijlstra Jun 05, 2021 1:03AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
None does. An intangible asset is almost hard to put a price on. A crypto has no intrinsic value and is therefore worth what the market finds it worth. Which can fluctuate highly as we have seen. A Musk tweet or a Chinese threat makes cryptos shoot up and down. But investors are now squeezed between high priced markets, like stocks, and very low interest rates. So TINA , there is no alternative, plays a role when looked for yield and with that, inflation protection.
Johan Zijlstra
Johan Zijlstra Jun 05, 2021 1:03AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
None does. An intangible asset is almost hard to put a price on. A crypto has no intrinsic value and is therefore worth what the market finds it worth. Which can fluctuate highly as we have seen. A Musk tweet or a Chinese threat makes cryptos shoot up and down. But investors are now squeezed between high priced markets, like stocks, and very low interest rates. So TINA , there is no alternative, plays a role when looked for yield and with that, inflation protection.
perplexed76 .
perplexed76 . Jun 05, 2021 12:39AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
crypto garbage final fight for survive
David Yaffe
David Yaffe Jun 04, 2021 5:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Changing a live infra is much harder than consult new one. ADA is build correctly on pos from scratch.In 2020 less than 30% of dapps had built on Eth. Its not a strong point for him
Imran Khan
Imran Khan Jun 04, 2021 5:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Eth 2.0 is already here. Ever heard of One( Harmony)
Eric Hay
Eric Hay Jun 04, 2021 5:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Do better Yasin.
Eric Hay
Eric Hay Jun 04, 2021 5:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
lol no. The fact that it can so easily change its monetary policy is the exact reason it's not a good hedge. The federal reserve could decide tomorrow to enact a deflationary policy. That doesn't all of a sudden make the dollar sound money.
rk fg
rk fg Jun 04, 2021 5:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Based.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email