Ethereum price increases as the network gears up for an EIP 1559 software update next week

The price of Ethereum has witnessed a sharp boost in the last 24 hours as the network gears up for a software update next week. The token was being traded above $2350 at the time of publishing this article with an increase of more than 14% in this week, and more than 3% over the last 24 hours.

Ethereum network is about to go under a technical change as a part of EIP 1559 (Ethereum Investment Proposal) on the next Wednesday and it will hamper the way transactions work on this network.

It will also reduce the supply of Ether tokens which is expected to increase its price according to the experts, as it did with Bitcoin’s halving event as every such event helped the rise of Bitcoin in terms of price finally making it reach a record price.

Andrew Keys, who is a managing partner at DARMA Capital estimates that Ethereum’s price should go up by four times with the upcoming upgrade in August and in the first quarter of 2022.

Also read : Twitter CEO Jack Dorsey puts a flag after ETH logo, people see the funny side of it

Explaining EIP 1559 upgrade

However, it is important for everyone to understand what does this EIP 1559 update means to use it the best way. As per the EIP 1559 upgrade, the Ether paid to miners to validate the transactions on the network will have clear transaction fees.

Currently, the miners are paid a gas fee in ether to process a transaction. The problem with gas fee is that the mentioned transactional fee is not clear and there is no way to find it beforehand. However, once the upgrade is done, the Gas fee which be upgraded to a Base fee.

Although, participants can still pay an extra tip to the miners apart from the base fee if they wish but this way, they will at least have a clarity over the transaction fee.

Along with that, a small amount of tokens will be burnt forever making the existing supply of Ethereum tokens rarer but more valuable.

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