It’s been a while since we’ve seen a proposal for the major change in the way cryptocurrency operates and it seems like the community might be ready for better services. Since the blockchain-based currency has been actively operating it has followed the same model of making transactions. The fees for transactions are based upon the urgency and the demand for block space, so if you want the transaction to be delivered as quickly as possible your fees will be higher as well. While most of the cryptocurrency customers have gotten used to this type of service the recent initiative is promising to make the whole process much more easier and most importantly efficient.
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The new initiative
According to the newest proposal of the crypto world, there is definitely a need for a fast change in the way the system operates and makes transactions now. While the urgency and block space criteria are important the whole process could benefit from revamping and a different approach to determining the fee for the customer. During the process, block space turns into a scarce asset and that’s how the miner gets their fees, which of course they want to keep as high as possible. This system has worked for a while and it is important to pay fees to miners but there might be a better alternative that will make the job easier for miners and those making transactions as well.
According to the proposal that has already gotten the attention of Ethereum executive, proposed a more simplified approach that will make the transaction process much more effective. The fees will be calculated upon different criteria, made up of the base fee that will be the same for everyone and a premium. The universal base feel will be based on demand for block space, rising or falling in tune with the market activity and the amount of transaction made at the moment. The premium will then be set according to the user’s preference, with the pre-approved range and the premium fees will go to the miners directly, while then base fee is burned. The idea has piqued the interest of not only ethereum users, but also some of the best forex traders that deal with crypto as well.
Not for everyone
While this may seem like a universal solution, the most popular cryptocurrency, Bitcoin would never work with this model. Considering the fact that the rewards are halved every 250,000 blocks, it relied heavily on the rewards for the miners to balance out the cut in block rewards, so the existing model is crucial for some cryptocurrencies.
Ethereum, on the other hand, could be perfect for that, because unlike bitcoin which has a baked-in supply cap, the Ethereum community decided on the reward’s size during each transaction. The model mentioned above could be perfect for Ethereum and it looks like partnership might already be in the making
Ethereum operates on the minimum necessary issuance policy and this new initiative could complement the existing strategy of the cryptocurrency. A lot of the members of the Ethereum community have expressed their support for this proposal and are excited to see it come to life. Usually, these sorts of initiatives spark a lot of debate and controversy but this one seems to have the unanimous support of the community. And quite honestly it could make the transaction fees a lot more balanced and manageable.
Considering the fact that Ethereum has been gaining a lot more traction it seems more manageable to conduct transactions this way and to simplify the procedure. Another positive development for Ethereum has been the rise of stable coins, even surpassing Ethereum transaction volumes. Stable transactions burn Ethereum and contribute to the supply. The cryptocurrency that is often overshadowed by bitcoin has been doing quite well for itself and this new project will likely help its reputation even more.
Future of market fees
For the longest time, the market ran according to the existing system and we haven’t seen many ideas challenging this setup and offering something better. While the way bitcoin works is very reliant on this system for those who could go a different route change could be revolutionary. This sort of modification adds more legitimacy to the cryptocurrency and could actually raise their trustworthiness. As mentioned above, Ethereum has never been as popular as bitcoin but with the more orderly way of paying market fees, it could attract new customers as well. In the recent months, we saw Ethereum move above $200 and trading to the new high at 8, and found support at $185-186 and we have observed a bullish pattern, in regard to resistance near $192 mark. Ethereum has had a good year so far and the innovations like there could help it keep the tempo. There are some concerning patterns as well, that could lead to a sharp decline but the Ethereum users seem relatively positive. Hoping that the currency won’t go down further than $185. But when it comes to market fees there is still room for improvement. Ethereum has the chance to introduce the first orderly payment system and probably gain more legitimacy in the eyes of authority and regulatory bodies who want to see these sorts of developments in the crypto world. While the official statement hasn’t been introduced quite yet, it is likely that since the idea has so much support from the community we will be seeing the real-life examples of base+premium fees this year.
The entire cryptocurrency industry could use a bit of a refresh, since the end of 2019 was definitely stressful for some crypto users. These sorts of initiatives will hopefully become more frequent allowing more growth in the community and supporting orderly fashion of crypto transactions.
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