Cryptocurrency

Ethereum 2.0 and EIP-1559 will increase the long term value of ETH as a Store of Value

Unlike Bitcoin, Ethereum has not been able to acquire the Status of a digital value to memory (Store of Value). It is not entirely clear why this is the case: The value has increased since the first edition of ETH by about 100,000 percent. According to a new report from a Research company, this will change probably as soon as possible. To Ethereum 2.0 and the Ethereum Improvement Proposal 1559 (EIP-1559) to contribute to well-being. The two Changes should increase the demand for ETH, while the offer is in the long term, reduced. What is it with this Theory on?

What’s going on currently in the case of Ethereum wrong

Fund managers have already done on many occasions their opinion that investing in Ethereum over long periods of time, little sense could be. The partners of Exponential Investments, Leah woods and Steven McClurg wrote in June, for example:

On the other hand, Ether in the face of his inability to serve adequately as a store of value, a high-risk speculative instrument. Ether-traders seek to profit from the subsequent price changes over a short time horizon. (…) Visions of the digital ingots to dance in front of your eyes. These visions, however, arise without evidence.

Delphi Digital, a well-known Research company currencies for Crypto, however, argues in a recent report that the introduction of Staking by Ethereum 2.0 (ETH2) and EIP-1559 will lead to a much stronger long-term value for the crypto-currency.

According to the report, “The State of Ethereum 2020” of Delphi Digital, which was recently published on the occasion of the fifth anniversary of the network, is not suitable for the current economic model of the ETH Zurich to promote the long-term success of the network:

The dApps built on the Ethereum network, driven by rising fees, which leads to a shortage of bandwidth, but not to the extent parasitic, as the activity derived On-a-Chain-increases the value of the fundamental value for ETH.

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ETH 2.0 and EIP-1559 to increase the long-term value?

Delphi, however, that this will change with the introduction of Proof-of-Stake with ETH2 and the implementation of the Ethereum Improvement Proposals 1559 (EIP-1559). The two technical Changes will work together to increase the demand for ETH and at the same time reducing the supply, thus the fundamental perspective of the crypto-currency will be strengthened:

The EIP 1559 and Staking (create) a symbiotic relationship in which not only the increase in benefits increases the value, but the introduction of the cash flows to a broader group of participants to secure the network a more effective long-term value contribution (for ETH) creates.

At the Moment Ethereum often facing the charge of that ETH is pursuing a unsafe money policy, which could deter investors to hold the cryptocurrency in the long term. In the implementation of the Staking and the EIP, which promotes the long-term Holding of ETH and the offer may decrease over time, the arguments for Holding the asset, much stronger.

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The comments in this article do not represent any trading recommendations or investment advice.

About the author

Eve Manning

Eve Manning

A native Texan, Eve first started out as a Finance Analyst and later realized that her true passion was not in trading but in writing. She leverages her experience in the Finance industry to analyse and write in-depth news articles covering the Cryptocurrencies, Economy & Finance industries.

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