Ethereum EIP 1559 explained, US infrastructure bill goes after crypto

Ethereum EIP 1559 explained, US infrastructure bill goes after crypto
7 min read
08 August 2021

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.Ethereum EIP 1559 explained, US infrastructure bill goes after crypto  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   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.

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Alex 9.9K
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