The cryptocurrency market is ever-changing. New projects are popping up all the time, while weaker ones become obsolete and slowly disappear from the front page of CoinMarketCap.
However, there are two main driving forces in the market and – Bitcoin and Ethereum. In addition to being the top dogs available for trade on popular platforms like Bitlevex, these coins can make or break the entire market.
The recent slump in crypto might have been started by Bitcoin and the price crash that it experienced in May 2021. With that said, both BTC and ETH have some important upgrades and updates coming in the following months that could flip the odds in the market’s favor, rather sooner than later.
In this article, we take a look at two major changes in Bitcoin’s and Ethereum’s protocol that might be a precursor to a new positive trend in the crypto ecosystem.
Ethereum’s London Upgrade
First on our list of most important crypto upgrades is the London hard fork for the ethereum network (Update EIP-1559). This update will be launched in July 2021 and marks a huge moment in ethereum’s history for the following reasons:
- The update will change how gas fees are calculated, resulting in fairer and cheaper transaction costs.
- A burn function will be introduced where a portion of the fees is destroyed. This should allow the Ethereum cryptocurrency to become more deflationary, with increasing scarcity over time.
- Adds a new transaction type where users can specify the maximum fee they are willing to pay.
Additionally, the update will add a “difficulty time bomb” that should discourage miners from preferring PoW over the upcoming PoS model that should be live sometime during 2022.
While the London hard fork will not be able to improve the scaling woes of the Ethereum network, at least we can see a temporary solution to the high fees the network has been experiencing lately.
These fees are considered to be one of the main culprits of the stagnating growth of the crypto markets and DeFi in the past couple of months. Once the update is implemented, we can expect a considerable price movement for Ethereum, like the one that followed the Berlin update in April 2021.
Bitcoin’s Taproot Upgrade
The Bitcoin Taproot upgrade is the first significant update of the BTC protocol in 4 long years. This update has already been approved by miners and should be implemented in November 2021. The reason for the delay is that upgrades of this scale should be extensively tested before they are considered safe to go live.
The Taproot upgrade will bring two very important improvements for Bitcoin – cheaper transactions and better privacy. To achieve this, Taproot will introduce Schoor signatures, a type of digital signature for transactions that is both lightweight and can carry complex data.
This way, bitcoin users will be able to use multiple spending rules for their transactions. However, to add to their privacy, they only need to reveal the rules that were used for that transaction.
So, complex transactions like those used in the Lightning network can look exactly the same as a regular p2p transaction on Bitcoin. Thanks to Taproot, transactions become indistinguishable from one another, no matter their complexity.
Consequently, the privacy of the users will be conserved, making Bitcoin transactions increasingly anonymous and difficult to trace back to the user.
Conclusion
Despite the recent price decline, the crypto community is still optimistic about the current bullish cycle. The main two reasons behind this optimism are the London (ETH) and Taproot (BTC) updates, both of which should significantly improve their respective networks.
These updates will make the two highest-valued cryptos more cost-efficient for ETH and more private in the case of BTC. This solves two major shortcomings of these veteran blockchains. As such, we can expect a lot of movement in the markets following these significant updates.
