The rise of transaction rates in Ethereum: a long term perspective
As the second largest market capitalization cryptocurrency, Ethereum has gained significant attention in recent years due to its innovative decentralized application ecosystem (Dapp) and increasing adoption. However, a common misconception among some cryptocurrency enthusiasts is that Ethereum transaction rates are significantly lower than those of other digital currencies, such as bitcoin or even traditional payment systems.
In fact, as the demand for transactions on the Ethereum network grows, the transaction rates also grow. This is because Ethereum’s consensus algorithm, work proof (Pow), depends on energy -intensive mining processes to validate transactions and create new blocks. These mining operations consume a significant amount of computational energy, which in turn increases the cost of processing each transaction.
The case of higher transaction rates
When almost all 21 million bitcoins are extracted, Ethereum’s network still faces challenges related to scalability, safety and congestion. To mitigate these problems, developers are exploring various solutions, including:
- Scale Solutions : Implementing technologies such as Shareding, Out of Chain Transactions or Second Layer Scale Protocols (LSPS), such as optimism, polygon or solana, can help reduce network load.
- Increased mining difficulty : As the hash (the full power power rate of all miners) increases, it becomes more challenging for miners to validate transactions and create new blocks. This can lead to higher rates as a result.
- Reducing transaction size
: Miners are encouraged to validate smaller transactions, which reduces network load and subsequently reduces rates.
The impact on transaction rates
Although it is true that Ethereum has seen significant growth in recent years, its transaction rates have not proportionally diminished. In fact, the average transaction rate on the Ethereum network has remained relatively stable in the last two years, ranging from 0.0002 ETH (approximately US $ 23) and US $ 1.50 ETH (US $ 150).
To put this from perspective, here is an approximate estimate of how transaction rates can change as the network grows:
- By 2020, when there were approximately 4 million transactions per day, the average rate was about 0.005 ETH (US $ 50).
- Up to 2022, with about 10 million daily transactions, the average rate can range from $ 20 to $ 40 (approximately 200 to 400 cents).
- As the network approaches its total supply of 21 million bitcoins and the demand for transactions increases, we can expect transaction rates to increase accordingly.
Conclusion
Although Ethereum transaction rates may not be as low as other short -term digital currencies, they are likely to increase over time due to growing demand for network transactions. As scalability solutions, increased mining difficulty and reduced transaction size become more prevalent, we can expect to see higher rates on the Ethereum network.
However, it is essential to note that the value of each currency is determined by market forces and, as the cryptocurrency scenario evolves, Ethereum price dynamics and other blockchain assets.
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