The increase in transaction rates in Ethereum: a long -term perspective
As the second largest cryptocurrency for market capitalization, Ethereum has gained significant attention in recent years due to its innovative decentralized application ecosystem (DAPP) and a growing adoption. However, a common mistake among some cryptocurrency enthusiasts is that Ethereum’s transaction rates are significant than they from other digital currencies such as Bitcoin or simply traditional payment systems.
Actually, as the demand for transactions in the Ethereum network grows, transaction rates will also do. This is because the Ethereum consensus algorithm, test of work (POW), is based on energy intensive mining processes to validate transactions and create new blocks. These mining operations consume a significant amount of computational power, which, in turn, increases the cost of processing each transaction.
The case for higher transaction rates
When almost 21 million bitcoins have been extracted, Ethereum’s network will still face challenges related to scalability, security and congestion. To mitigate thesis problems, developers are exploring several solutions, including:
- SCALE SOLUTIONS : Implementation of technologies such as fragments, transactions outside the chain or second -layer scale protocols (LSP) such as optimism, polygon or solar can help load on the network.
- Increased mining difficulty : As the total hash rate increases (the collective computer power of all miners), it becomes more difficult for miners to validate transactions and create new blocks. This can lead to high rates as results.
- Reduce the size of the transaction : miners are encouraged to validate narrower transactions, which reduces the load on the network and reduces subfreffly rates.
The impact on transaction rates
While it is true that Ethereum has seen significant growth in recent years, its transaction rates have not decreased proportionally. In fact, the average transaction rate on the Ethereum network has remained relatively stable in the last two years, varying between 0.0002 ETH (approximately $ 23) and $ 1.50 ETH ($ 150).
To put this in perspective, here is an approximate estimate of how transaction rates could change as the network grows:
- In 2020, when there were approximately 4 million transactions per day, the average rate was around 0.005 ETH ($ 50).
- By 2022, with an estimate of 10 million daily transactions, the average rate could range between $ 20 and $ 40 (approximately 200-400 cents).
- As the network approaches its total offer of 21 million bitcoins and increases the demand for transactions, we can expect transaction rates to increase accordingly.
Conclusion
While Ethereum’s transaction rates may not be as low as other short -term digital currencies, they are likely to increase time due to the growing demand for network transactions. As the scalability solutions, the increase in mining difficulty and reduced transaction size become more frequent, we can expect to see higher rates in the Ethereum network.
However, it is essential to take into account that the value of each currency is determined by the market forces, and as the panorama of cryptocurrencies evolves, so will the dynamics of Ethereum prices and other blockchain assets.