EIP-1559 Has Already Burned $1 Million Worth of ETH (cryptobriefing.com) 57
$1 million worth of ether (ETH) has been removed from circulation, or "burned," in under three hours since the London hardfork and the implementation of EIP-1559 earlier today. Crypto Briefing reports: With the new update, the base fee from each Ethereum transaction gets burned, deflating the supply of ETH. In the meantime, the price of ETH has jumped more than 6% in the last hour. A few deflationary blocks have already been added to the chain, with the amount of ETH burned higher than the block rewards (2 ETH). At the time of writing, Ethereum has burned 408.84 ETH -- about $1.1 million at current market prices. According to data from ultrasound.money, some of the biggest ETH burners so far have been Uniswap, OpenSea, and Tether. The first on the leaderboard, though, is a mysterious "$LONDON Gift" project that seems to be dedicated to celebrating the London hardfork.
To understand how EIP-1559 works and what it means for Ethereum in the future, a recent Crypto Briefing interview with Ethereum researcher Justin Drake discusses the changes and what they mean for the network. Drake told Crypto Briefing that the update brings "pure improvement" in several areas with no drawbacks. While a sustained rate of over 2 ETH per block is necessary to see Ethereum's supply deflate, EIP-1559 is the first step on Ethereum's road to a deflationary monetary policy. While the current Proof-of-Work consensus mechanism still sees Ethereum pay miners more than 12,000 ETH every day, experts believe Proof-of-Stake will see validators receiving around 1,000 ETH every day. At that point, assuming similar network usage, ETH will become a deflationary asset.
To understand how EIP-1559 works and what it means for Ethereum in the future, a recent Crypto Briefing interview with Ethereum researcher Justin Drake discusses the changes and what they mean for the network. Drake told Crypto Briefing that the update brings "pure improvement" in several areas with no drawbacks. While a sustained rate of over 2 ETH per block is necessary to see Ethereum's supply deflate, EIP-1559 is the first step on Ethereum's road to a deflationary monetary policy. While the current Proof-of-Work consensus mechanism still sees Ethereum pay miners more than 12,000 ETH every day, experts believe Proof-of-Stake will see validators receiving around 1,000 ETH every day. At that point, assuming similar network usage, ETH will become a deflationary asset.
So all crypto will die (Score:4)
Deflationary monetary policy means that it's always best to hold onto currency and never spend it. The value can "only" increase. However that means that nobody wants to buy anything with the crypto currency, instead they should just hold it. So eventually it is just a vehicle for speculation. In which case the long term real value is zero. That's already visible with Bitcoin where actually spending the stuff is slow and impractical but, as long as nobody tries to actually get their money out, the price just keeps increasing and increasing but, as soon as a whale starts to sell if all collapses. Soon it will be true of ETH too.
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That's already visible with Bitcoin where actually spending the stuff is slow and impractical but, as long as nobody tries to actually get their money out, the price just keeps increasing and increasing but, as soon as a whale starts to sell if all collapses.
Wait! Now whales own Bitcoin? I am *really* out of the loop on this.
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If ETH is "cryptocurrency for nodejs kiddies" then no wonder it's worth so much. Nodejs is hugely popular with no end in sight.
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Its webscale
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You have no credibility. Go away.
Not that unlikely (Score:2)
Deflationary monetary policy means that it's always best to hold onto currency and never spend it. The value can "only" increase. However that means that nobody wants to buy anything with the crypto currency,
Wouldn't you still want buy something with it that could also increase in value, possibly at a grater rate?
Also it's quite common for people to sell stocks, that they expect to rise in value, to pay for something they desire now (like a house or a car) but they do not have enough cash on hand for. Peo
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Wouldn't you still want buy something with it that could also increase in value, possibly at a grater rate?
Well, I guess like most people I would love to get the money that the person at the tip of a pyramid scheme gets. My initial investment increasing exponentially the further it goes. I wouldn't do that though because not only would it be illegal, it would be immoral too. In the end, the pyramid scheme has to collapse. This is because you are confusing price with value.
Deflationary cryptocurrency is effectively that. You start with a finite amount of currency; enough to actually transact and buy things.
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Since any number of new crypto currencies can be created, it's unlikely that they can all rise to bitcoin's value. Therefore if your hypothesis is correct their value must approach zero as the potential supply of new cryptocurrencies is infinite.
Re:So all crypto will die (Score:4, Informative)
A big trend in modern capitalism is to complexify monetary transactions and vehicles. The purpose is to make transactions and their underlying assets too complex for most people, who are not experts, to understand. This is especially true of cryptocurrencies. Like derivatives, they are meant to be inscrutable so that they aren't examined too closely. You know, like "mortgage backed securities"? Part of the purpose of this is to help sell the "product" to buyers who aren't as savvy as the seller. It will be fascinating to see how crypto plays out. And when it is all said and done, maybe, just maybe, I will be able to buy an RTX 3080. (Sigh)
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Financial derivatives really aren't that complex. If you can do basic calculus you should be able to handle the concepts behind financial derivatives - they are all basically contracts for different kinds of financial promises.
If you can't understand the contract then you definitely shouldn't be buying them.
If you signed a rental contract and thought you were buying a house, not renting it, because you didn't understand the contract, who's to blame?
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OK, you've read me the standard disclaimer, so now what financial scam have you got to sell me today?
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ETH isn't currency.
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If nobody spends it, there will be no fees burnt, and it wont be deflationary. It will only be deflationary while its widely used and the network is busy, so your theory can not hold true.
Correct. Eventually, once the crypto-economy has collapsed the deflation will stop. In the meantime, however, before the pyramid collapses, it will drive the scheme. Clever huh?
PoS is rich-gets-richer scheme (Score:2, Interesting)
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Here is PoS:
1. The list of valid transactions determines who has coin.
2. [add some complexity...]
3. People with coin decide which transactions are valid.
4. GOTO 1
This is the same kind of circular logic we got with the perpetual movement.
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Crypto has one of the worst wealth disproportion in any monetary system on the planet.
PoS would only amplify that problem.
It's ironic that those who are into crypto have an aversion to "centralized authority" but the very process of their alternate system becoming more popular would create an even smaller number of super-powerful oligarchs who would wield tremendous influence over the whole system.
It's as if the entire industry is a joke, and nobody has gotten it yet.
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Because, "Crypto" is a meaningless word. The word "Crypto" has only one usage to push people to confuse incompatible fields like Astrophysics with Astrology.
F.A. Hayek in 1984: "I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop."
Bitcoin is the answer to Hayek.
Ethereum is another implementation of
Re: PoS is rich-gets-richer scheme (Score:2)
This has been my feeling about it too. I'm looking at Helium where all the big boys with money can be the early adopters even though we all see the potential no one can buy a $50,000 marked up $300 miner. Once it haves and all the profit is gone I feel like the prices will drop to where someone like me could get into something that's now not worth it.
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PoW is costly and resource-intensive. PoS is just costly.
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Crypto is a rich gets richer scheme. People who had money to blow on some random speculation years ago get millions for nothing. Or people so rich they can buy up thousands of GPUs and set them to work doing nothing but burn electricity.
Wanna see a bitcoin boomer thrown into a rage? (Score:3, Informative)
According to Coindesk right now:
Bitcoin YTD returns: 40.29%
Ethereum YTD returns: 280.79%
Dogecoin YTD returns: 4,130.81%
Re: Wanna see a bitcoin boomer thrown into a rage? (Score:1)
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Indeed, but the difference is that regulations make it incredibly unlikely to happen with fiat currencies unless there is already a complete monetary collapse within a financial jurisdiction. Cryptocurrency is on the other hand powered entirely by faith and fear. FOMO caused the price to rise, FOMO can cause the price to crash.
Another pyramid scheme (Score:5, Interesting)
Actual "currency" needs to be somewhat stable to slightly inflationary, so people you know, exchange it between each other for goods and services instead of holding it hoping they'll be richer. If the "value" is in a "store of value" then it doesn't need deflationary pressure, it will just fluctuate depending on how much people currently value "a store of value", just like gold
If it's deflationary by nature, just like bitcoin, it'll just keep going up until the highest possible price is reached. The last ones holding the coins won't find anyone to buy them though, they'll be the highest bidders, and the price will tank like a motherfucker.
It's a pyramid scheme, it's a pyramid scheme by design and they're shoving it in your face, and just like "the south seas trading company" centuries ago people are too greedy to care, because they won't be the ones holding the coins when it crashes, they're special after all.
ETH is not a store of value currency (Score:2)
ETH was never intended to be a store of value.
I'm not going to bother to go further on that, as details about what ETH is are widely available.
Having said this, it is absolutely being used as a speculative investment and the price is just absurd - there is no doubting this.
The market cap value of an asset, that even with all of the tokens on that blockchain considered, pretty much has no tangible product right now. It is mostly just a bunch of startups and scams.
The bubble will burst, but the purpose of ETH
WTF is EIP-1559? (Score:2)
Here, I'll save other readers some time. I found some hints buried in one of the links [cryptobriefing.com]:
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LOL.. "benfits all holders"... It doesn't benefit the people that need to buy/sell ETH to make the network continue to operate. If everybody held their ETH, then the pyramid would collapse.
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That's not how it works. People are constantly trading ETH. Everyone has an exit point. The endgame is that the only people HODLing ETH will be those that intend to spend it on transaction fees.
I'm glad to know (Score:2)
They STILL haven't switched to Proof of Stake? (Score:4, Insightful)
How long have they been doing "any minute now" with Proof of Stake? They've been certainly using its "coming soon" status as a dodge for all of 2020 and 2021 to counteract the narrative that all crypto really does is waste energy.
If they couldn't tie it into an actual hard fork of the coin, how serious about switching are they?
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Crypto has an identity crisis (Score:2, Insightful)
Currency needs to be stable and not go up/down - in order to be useful to trade.
An investment needs to create value in order to be useful.
Crypto does neither. See CryptoReality [reddit.com].
This is the conundrum of crypto. It sucks as a currency, and as an investment, it's basically a Ponzi scheme because it has no intrinsic value, creates no value, and only generates a return when sold, and whose value must constantly increase in order for the scheme to continue operating. That's mathematically impossible.
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Unfortunately it will suffer a chicken and egg problem precisely for the reasons it actually campaigns against: Lack of central regulation.
For a currency to be stable it needs to be traded against physical goods or services at high volume. The value of those goods or services peg the value of the currency when the trading volume exceeds the ability to simply speculate on value. However we don't trade it against physical goods because it's not guaranteed to even be the same value by the time it has finished
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ETH isn't currency. I don't know why people think that it is.