The cryptocurrency known as Ether, which transacts on the Ethereum blockchain, is the second-largest in the space after Bitcoin.
While Ether has been on a tear of its own of late, outperforming Bitcoin along the way, that run may not be over. In fact, it may be getting some assistance in the form of reduced Ether supply.
“Ethereum blockchain developers approved one of the biggest changes to the network since its inception in 2015, a shift that could spur even bigger gains in the price of its native cryptocurrency Ether,” reports Matthew Leising for Bloomberg.
“The move will reduce the amount of outstanding Ether by destroying some of the tokens every time it’s used to fuel transactions on the world’s most-used blockchain,” according to Bloomberg. “Known as EIP 1559, the change solves a current 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. EIP 1559, which will become part of an upgrade in July or August, will embed an average price into the network itself making the guessing game obsolete.”
Ethereum is an open-source, blockchain-based distributed computing platform that can support smart contract functionality.
That’s a complicated way of saying that Ethereum not only makes a cryptocurrency called Ether possible, but can also support the launch of new cryptocurrencies and make it possible to crowdsource funding for new projects.
The simplest way to think about Ethereum is to compare it to something you probably use every day: your mobile phone. If you have an Android or iOS phone, you have apps that can perform a wide variety of functions from ordering an Uber to mapping a route across town.
What gives Ethereum an edge against Bitcoin is its implementation of smart contracts, which allows developers to run decentralized applications, or dapps, directly on the Ethereum blockchain. Although the possibilities for smart contracts are nearly endless, a few dominant use cases have emerged.
“Ether has seen an already incredible price gain in the past 12 months, along with Bitcoin and other digital assets. Ether has risen about 560% in the past year, while Bitcoin is up about 430%, according to data compiled by Bloomberg. Unlike Ether, Bitcoin has had since its start in 2009 a fixed supply of 21 million coins that will ever be created. That difference has led critics of Ethereum to say it shouldn’t be viewed as a similar digital currency as Bitcoin,” concludes Bloomberg.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.