India's blockchain ecosystem in largely built on Ethereum. So Indian investors will gain from the fall in transactional costs, which could lead to blockchain activity going up.
Ethereum, the world’s second-largest cryptocurrency after Bitcoin, got a much-awaited upgrade on August 5 in London. The 'London Hard Fork' update is expected to revolutionise the Ether blockchain by enabling the network to handle a higher volume of transactions every second. It is also expected to counter the surge in gas fees.
London Hard Fork: What is it?
The London Hard Fork consists of a set of five Ethereum improvement proposals, also called EIPs, which are standards specifying potential new features or processes for Ethereum, according to Ethereum’s official site. They contain technical specifications for the proposed changes and act as the “source of truth” for the community. Network upgrades and application standards for Ethereum are discussed and developed through the EIP process.
The London Hard Fork contains the EIP-1559, whose objective is to enhance the speed and incentivisation of the mining of Ethereum.
Being an inflationary cryptocurrency, there is no limit on Ethereum count and miners get new coins on validating a block. They receive transaction fees, which are in turn are sourced from users. Once London Hard Fork rolls out, miners would not receive revenue from transaction fees. This will lead to a drop in supply and make transaction fees much more foreseeable to the users of the blockchain. Ethereum is expected to get a much-needed boost from this.
The London Hard Fork will make sure that the Ethereum gas price does not shoot up due to network congestions. This step, taken towards achieving transparency in prices, is expected to lead to an increase in the adoption of such decentralised applications. Tim Beiko, Ethereum Foundation developer, has said the London Hard Fork will not affect Ether owners. This is inclusive of people who use crypto exchanges and wallets like hardware, web, or mobile wallets.
Nischal Shetty, CEO of WazirX, India’s largest cryptocurrency exchange, said this update will bring down the volatility of transaction fees. This was earlier a recurring issue faced by both developers as well as investors of Ethereum.
As far as investors are concerned, the London Hard Fork will have a massive long-term impact on them. With the cost of the Ethereum blockchain coming down, there will be a surge in its demand and adoption, which will ultimately push the price of the token to new highs.
Lower transaction fees will also benefit artists, non-fungible token (NFT) creators and other developers using the Ethereum platform to build decentralised applications.
Some experts believe that this new system upgrade will be beneficial for India. The majority of India's blockchain ecosystem is built on top of Ethereum and Indian investors will gain from the fall in transactional costs, which could lead to blockchain activity going up.
(Edited by : Shoma Bhattacharjee)