Good news first, EIP 1559 is live and the Ethereum network has already burned a couple of thousand ETH. That happened fast! We’ll tell you everything you need to know about EIP 1559 and how it could affect the price of ETH in just a second, but first… A bit of bad news.
The United States government is trying to force through some last minute crypto legislation that could have a long-lasting impact on how blockchain technology is regulated in the US. We’ll get you filled in on what’s happening and why this particular piece of legislation could be a game changer.
Ethereum News: EIP 1559 update + ETH price
Ethereum’s EIP 1559 just went live a day ago and this is definitely one of the biggest stories we’ve seen in crypto in a long time. EIP 1559 stands for Crypto, and it’s an idea that’s been floating around for a couple of years now. Basically how it works is that EIP 1559 divides the gas fees on Ethereum into two parts. The base fee is what you need to pay to get your transaction included in the next block. The tip is an extra fee that sophisticated Ethereum users can pay to get their transactions ordered in a specific way.
The benefit of this new system is that gas fees are predictable. Users always know how much they need to pay to get their transaction included in the next block, a huge improvement over the old version of Ethereum where you had to guess how much to pay.
Besides predictable gas fees, the other big change is that EIP 1559 burns the base fee, leaving miners to only collect the tip portion of the transaction fees.
Burning the base fee accomplishes several things, but first and foremost it’s a way for Ethereum investors to benefit when people use the network. The more transactions, the more ETH that gets burned. This reduces the overall supply of ETH which should lead to higher prices down the line.
Even though EIP 1559 only went live yesterday, according to the website EthBurned.info the network has already burned more than 4,000 ETH! That’s $11,000,000 worth of Ethereum that’s gone up in smoke in just one day.
Extrapolate that over a year, or ten, and you can see how much of an effect EIP 1559 could have on Ethereum’s price! Ethereum's investors seem to be taking this seriously and the price of ETH is up 39% in the last two weeks.
Nobody can predict future crypto prices but with EIP 1559 continuously burning Ethereum’s supply, it’s a fair bet that we could see a new ETH all-time high before the end of the year.
US infrastructure bill and crypto
Don’t fall out of your seat in shock, but the latest infrastructure bill from the United States deals with a lot more than just bridges and potholes. For example, there’s a section about crypto and while I’d love to tell you that it’s good news, it’s really not. The primary concern is a section of the bill that defines who is, and is not, a “crypto broker.”
The problem is that the bill uses unnecessarily broad language to classify all sorts of crypto participants as brokers, so that almost anyone can meet the criteria. For example, proof of work miners or proof of stake validators. That’s a problem because once someone is classified as a broker they need to submit tax and other legal documents for their “clients.” So you can see the problem here, how the heck is a miner going to identify his or her clients, and then submit tax documents to the United States government about them?
It’s a ridiculous proposition that would suggest one of two scenarios. Either the government officials who wrote this section of the bill are completely crypto illiterate and have no clue what they’re doing. Or… They know exactly what they’re doing and want to use this bill as a chance to drive crypto out of the United States. For example, if miners can’t submit tax documents they can’t do business in the US.
Whether it’s ignorance or a planned step crypto ban, crypto advocacy groups like Coin Center and the Electronic Frontier Foundation are hard at work trying to get the language of the bill changed. For the latest updates you can follow Ryan Selkis, the CEO of Messari, and Jerry Brito, the executive director of Coin Center, on Twitter.
Let’s hope the crypto community is able to come together and get the language in this bill changed before it’s too late!
SECs Gensler on Bitcoin & Crypto
The crypto community was thrilled when Gary Gensler was named as the head of the SEC. Gensler is well known for teaching a blockchain class at MIT and many people figured that he would bring favorable regulation to the cryptocurrency industry. Flash forward to today and it’s no longer clear what direction Gensler is going to take the SEC. For example, Gensler recently appeared on CNBC’s Squawk Box program where he made a bunch of remarks about the crypto industry and impending regulation. Here’s Gensler in his own words, quote,
Bitcoin and the hundreds of other coins that investors are trading is a speculative asset class. The trading platforms they are on are not currently under a regulatory regime that protects them like they are trading on the NYSE.
From there Gensler went on to opine about Bitcoin’s potential. Quote,
I'm pro innovation, but we also need rules of the road. Satoshi Nakamoto's invention if it is going to meet its potential it needs to come within public policy frameworks.
That’s an interesting take. According to Gensler, the only way for Bitcoin to flourish is with government regulation? Where is one example of a revolutionary new technology that only succeeded because regulators came up with some new rules?
Bitcoin doesn’t need government regulation to flourish. At this point it’s hard to say exactly what Gary Gensler stands for. He knows blockchain technology and what it’s capable of, but he also seems keen on introducing new rules that could restrict crypto innovation in the United States. We’ll be keeping a close eye on this and let you know as we hear more about Gensler’s future plans for crypto.
Exodus Shares & tZERO
tZero a leader in blockchain innovation and liquidity for digital assets, announced today that it has begun onboarding Exodus investors into its online trading platform for Investors seeking to purchase or resell the Exodus Class A common stock. This is very exciting news indeed, and we will keep you up to date on the progress. You can open your Exodus wallet and visit the shares app to register with tZero.