Ethereum is the second biggest cryptocurrency by market capitalisation, and some crypto-pundits believe it could knock Bitcoin off its first position perch. However, the transaction fees on the Ethereum network are a huge hurdle in advancing the wider use of the cryptocurrency. In May, the average transaction fees on the Ethereum network surpassed $70, making it not ideal for daily retail use.
The London hard fork update to the Ethereum blockchain is expected to resolve the issue of the cryptocurrency’s high transaction fees.
The update that is expected to take place on August 4 will also start its transition from proof of work to proof of stake, which is a less energy-intensive consensus mechanism for validating transactions.
Speaking to Express.co.uk Konstantin Anissimov, Executive Director at CEX.IO, said: “The London hard fork could mark a significant change in Ethereum’s reception and price.
“The hard fork is expected to make the cryptocurrency less inflationary and help prepare for the rolling out of Ethereum 2.0 in time to come.
But, speaking to Express.co.uk about the chances of increased institutional investment in Ethereum, Giacomo Arcaro, an entrepreneur at Growth Hacker, said that this could be the case but advised that “a lot can change between now and then and all we can do is speculate”.
He added: “It’s also possible that this shift is effectively already ‘priced in’.”
However, this is a view that is disputed by Adam Todd, Founder and CEO of Blockster, who claimed that the London hard fork update will see a transaction cost reduction, which he stipulates, “experts expect at about 20 to 30 percent”.
Mr Todd added that this would materialise as not much of a reduction in Ethereum transaction costs “when peak volumes go through”.
He added: “In short, those betting on substantial fee cuts or an ETH price hike will likely end up disappointed.”
The Ethereum London hard fork is part of cryptocurrency’s final stages before the release of Ethereum 2.0.
The hard fork will launch on August 4, after a delay and reschedule from the previous release date of the end of July.
The update will see five Ethereum Improvement Protocols (EIPs), which will include the important EIP-1559 and EIP-3554.
Express.co.uk does not give financial advice. The journalists who worked on this article do not own Ethereum or Bitcoin.
The current bitcoin price is $31,632, with only a 0.42 percent change in the last 24 hours.
The ethereum price has had no marked volatility today, holding at $1,886.02, with a drop of 0.58 percent in the last 24 hours.