Despite the verbal onslaughts from SEC Chairman Gary Gensler and Congress, Ethereum (CCC:ETH-USD) and second-generation cryptocurrencies reached key development milestones recently.
The regulatory risks have done little to stop ETH-USD, which posted over a 60% gain in the past month. With critical updates to the platform, the Ethereum community is salivating on the prospects of its switch proof-of-stake mechanism next year.
It’s been an incredible year so far for Ethereum, which has outperformed the top cryptos by a substantial margin. The Ether token has registered a colossal 339% growth since January. Though its price dipped mid-way through the year, it has recovered remarkably well in line with the rest of the industry.
It is experiencing supply shortages with its tokens locked away for smart contracts and staking purposes. The successful implementation of its “London Upgrade” ETH-USD is poised for even bigger gains this year and beyond.
Ethereum Gets the London Upgrade
The London hard fork update to the Ethereum platform was released in August and laid Ethereum 2.0, which essentially transitions the platform completely to the proof-of-stake model. The London hard fork represents the penultimate step in the transition scheduled to take place sometime in 2022.
With the new upgrade, ETH owners can validate transactions in exchange for a portion of the transaction fees or interest. The move could potentially reduce the consumption of energy by as much as 99%. If everything works out, it would resolve the environmental concerns surrounding Ethereum and cause its price to skyrocket.
The protocol creates a disincentive for mining by introducing the burning of transaction fees, reducing mining revenue by 20% to 30%. Users are supportive of the upgrade as it is likely to provide them with more predictable gas fees. Moreover, they will have an additional stream of revenue in addition to the ones mentioned earlier. Miners can receive tips concerning a particular transaction. It is essentially a priority fee that allows users to pay for their transactions to be prioritized over others by the network.
The London hard fork and Ethereum 2.0 are updates that have been years in the making and are only going to boost the platform’s value going forward.
U.S. Tax Treatment Remains Clouded
Government officials are confronted with the challenge of applying legacy frameworks to the regulation of digital assets. However, the U.S. Senate’s position on the tax treatment of cryptocurrencies is unclear.
The final amendments failed to pass through the Senate due to partisan bickering. As it stands, the “moderate” position does not provide any leeway to the broker definition for those developing cryptocurrencies and other digital assets.
Nonetheless, the Ethereum network continues to solidify its position in the industry with the roll-out of its critical updates. It enjoys robust tokenomics and better security. More importantly, the new fee mechanism drastically improves the user experience.
With approximately 26% of all ETH supply locked away in smart contracts and for staking, the number of sellers in the network will continue to shrink. Therefore, ETH will continue to gain handsomely in the near term and the future.
The Bottom Line On ETH-USD
Ethereum has been killing it of late despite regulatory headwinds. The release of the London fork update is a momentous event for Ethereum users and will ensure the smooth transition to the Ethereum 2.0 update.
Due to the platform’s updates, the squeeze on supply will continue pushing the ETH-USD price to new heights. In all, that makes Ethereum the gold standard for cryptocurrencies at this time.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.