- Ether surged as much as 8% on Thursday following a network upgrade to Ethereum.
- The upgrade, codemaned EIP-1559, aims to make transaction fees more predictable and will slow the creation of new tokens.
- Some investors believe that limiting the supply in ether could lead to a continued price increase.
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Ether surged as much as 8% over the past 24 hours to a high of $2,820 after a network upgrade to Ethereum took effect.
The "London hard fork" upgrade, codenamed EIP-1559, will further limit the supply of ether coins by slowing the creation of them. The highly anticipated upgrade led some investors to believe that the upgrade will lead to an upswing in ether's price.
That upswing is now taking place, as it surged to its highest levels since early June and began to test a key resistance level. Now, ether is primed for a 20% rally to $3,356, according to technical analyst Katie Stockton of Fairlead Strategies.
The EIP-1559 aims to make transaction fees more predictable, therefore enhancing the ease of use of the ethereum network. With the network upgrade in effect, users will abandon the previous auction system for ether coins and instead pay a base fee. That base fee will be algorithmically determined by the network depending on how busy it is, instead of submitting bids. They will also be able to pay a miner a "tip" to have their transaction processed sooner.
While the EIP-1559 upgrade has made some significant changes to the ethereum network, it pales in comparison the ethereum 2.0 upgrade expected to be complete by early 2022. That upgrade will see the network change from a "proof-of-work" system to a "proof-of-stake" system.
Developers are also working on scaling up the ethereum network by adding more side networks and linking them. Ethereum insiders hope this will reduce congestion and transaction costs.
Ether's ongoing network upgrades set it apart from bitcoin, which was built as a decentralized peer-to-peer payment platform, making it harder for network upgrades to take place.