With the Ethereum London upgrade, what has changed in its blockchain network and how to buy ETH in 2021.
The most anticipated Ethereum London upgrade was activated on 5 August 2021. The upgrade is formally known as London hard fork which means an unchangeable permanent modification on the blockchain. The community added London before the hard fork because they want to name it after the city where Devcon international developer’s conference was hosted.
The software upgrade brought a few big and necessary changes to the world’s second-largest cryptocurrency. Ethereum (ETH) users have faced lasting problems with scaling and its unreasonable transaction fees. Due to the recent surge in Non-Fungible Tokens (NFTs) that are built on the Ethereum blockchain, these problems have become worse. The main aim of the London upgrade is to create a transparent fee structure for ETH users. Let us explore the Ethereum improvement protocols in this article.
ETH London Upgrade
The Ethereum London upgrades are implemented to make the blockchain more efficient and make the fee structure transparent. This upgrade or London hard fork consists of five Ethereum Improvement Protocols (EIPs). You might have heard of only one protocol which is EIP 1559, but there are four more protocols included in the upgrade. Let's look all these five EIPs and how they make the blockchain more efficient.
EIP 1559 is the most popular update of the London hard fork. The two components of EIP 1559 are the reasons for the excitement and controversy in the community. First, it adds a base fee to all the transactions on the Ethereum blockchain. That might sound complex, but it helps users estimate the fee. Before the update, the system had to rely on the live auction. As a result, many people has overpaid the transaction fees.
The second component of EIP 1559 is that the miners will not be able to get the fee. Most of the gas fee is burned. When gas fee is burned, it means that the ETH is sent to an isolated address and removed from active circulation. Because of this, deflationary effects will be created on the network, and the value of existing Ethereum increases.
EIP 3198 is a sister proposal to EIP 1559. It extends the user experience improvements to smart contracts. Smart contracts are a part of the computer codes which carry out the instructions on the Ethereum blockchain. Decentralized finance (DeFi) applications are able to remove the middlemen with the help of smart contracts. This EIP protocol makes sure users do not overpay for the transactions carried out based on smart contracts.
EIP 3529 can also make a big impact on the network. This protocol removes the refunds for certain opcodes. Currently, you can get a refund on gas fee when cleaning up after yourself on the network. Cleaning up is needed because smart contracts and related data will clog up the network.
People fill up the network with unnecessary data when the gas fees become low. When the gas fees become high, they will clear all the unnecessary data to get those refunds back. By removing the refunds through this protocol, EIP 3529, the network will become more stable.
EIP 3541 will not do anything by itself. This update reserves the space within the network to create new smart contracts. It makes the process of creating new functionality to the Ethereum virtual machine a smooth experience, without affecting or disturbing the existing ones.
EIP 3554 is the standard of the London upgrade. This protocol is set to release a ‘difficulty bomb’ in December 2021. It makes the process of solving complex cryptographic problems even more difficult to earn ETH. As a result, the network will become slower. Once EIP 3554 becomes fully operational, the Ethereum blockchain will move from proof-of-work to proof-of-stake model. To secure their ETH, miners have to dedicate their ETH to the network.
Impact on ETH price
The Ethereum London upgrade was expected to reduce the gas fees or transaction fees. Gas fees or transaction fees is the fees required for verifying or authenticating the Ethereum transactions.
The update reduces the gas fees by burning most of those that are involved in the transactions and take them out of the active circulation. The supply of Ether will decrease if the gas fees are burned. As a result of lesser Ethereum tokens, it may become more valuable.
According to Ethereum Blockchain Explorer's burn tracker, more than 67,700 ETH are burned at the rate of 2.37 ETH/minute till August 20. Because of burning the large amount of Ethereum, a deflationary effect is created. As a result, the price of Ethereum is increasing.
The price of Ethereum is moving around $3,200 USD according to CoinMarketCap on August 20. Though the ETH price has increased after the London update, the gas fee hasn’t really been reduced yet. Experts are saying that it takes more time to reduce the gas fee and it is expected to reduce overnight.
Step-by-step Guide: How to Buy ETH?
Whether you are an experienced trader, retail trader or even a crypto beginner, you can buy Ethereum from XanPool without any hassle. Aimed to be the most affordable infrastructure, XanPool provides a platform that allows any crypto lovers to convert fiat (their local currency) into crypto using local payment methods.
Let's look at the 6 steps on how you buy Ethereum from XanPool.
First, create an account by signing up at XanPool. Provide your contact details and submit a video for Know-Your-Customer (KYC) process to set up your account. (Watch XanPool's KYC video guide here.) You can also sign up using your personal Facebook account.
After creating an account, go to the widget on XanPool and select the country you're in. We'll be using Malaysia as an example today.
Once you've selected the country, the local payment method will be shown — Malaysia uses DuitNow. Next, select Ethereum from the list of cryptocurrencies and click Xchange.
Choose where do you want XanPool to transfer your Ether (ETH) to. You can either provide a wallet address that you already own or transfer directly into your OKEX wallet (which you'll be required to login/signup). In this example, an Ethereum address is provided to receive transfer.
Check the box at the bottom and confirm that this address belongs to you. Now, click the Xchange button on the right-side to exchange!
In a few minutes, XanPool transfers Ether (ETH) into the address that you've provided!
And that's it. I hope this has been a simple and helpful step-by-step guide for you!
Ethereum is the second-largest cryptocurrency in the world. The total market cap of Ethereum has grown to over USD 250 billion since it has been created in 2015. The Ethereum London upgrade is going to make some necessary changes to its blockchain, making it much more transparent and efficient.