Ethereum is an open-source decentralized Blockchain platform. It is the cryptocurrency of Ethereum platform, which is ranked as the second-largest cryptocurrency. It is placed behind Bitcoin as it comes at the second number. Many expert digital traders have the idea that Ethereum is a great place to invest your savings than other cryptocurrency platforms.
Ethereum platform experiences many ups and downs, but this year spike in fees may cause tremendous damage to the Ethereum platform.
Excessive Ethereum Transaction Fees
All of the transactions are subject to the fees on the network. On August 1st, the Ethereum network experienced a spike in that caused delay transactions and withdrawals. The spike in the fees is caused by the withdrawal demand of customers. When users send transaction payments at the same time, fees rise. When demand reduces, fees are reduced. It is due to the fixed transaction processing capacity of the network.
August 1st, 2020 – Spikes in Ethereum Transaction Fees
Sharply at 9:45pm PST, Ethereum experienced a spike in the transaction fees. Fees for the single transaction on the Ethereum platform had risen so high that miners made a record profit of $500,000 in just a period of one hour.
The average fees of a single successful transaction of the Ethereum Blockchain have experienced a fall by 82%. By September 2, the fees of the Ethereum fell from $11.61 to $2.09 as of this previous Sunday. At this current rate, the transaction fee for the process of a single payment is hefty.
According to the data received from the Glassnode, Ethereum miners have experienced a sharp drop in their total earnings within the last few weeks. Though transaction fees have reduced, it will still impact the popularity and functionality of the Ethereum platform.
How Can It threaten the Ethereum Ecosystem?
The sudden rise in fees can be an end of the Ethereum ecosystem in the following way:
1. Looming Threat of Hackers
Ethereum stability has been challenged by spikes in fees of Ethereum. Experts have speculated that Ethereum may be attached by hackers. Cases have been witnessed in which $200,000 was stolen from one of the exchanges of cryptocurrency.
During the high fees period, miners of the Ethereum network made $500,000 in an hour. Hackers can steal money by attacking Ethereum accounts. The looming threat of phishing attack is one of the reasons why spikes in fees can trouble the Ethereum ecosystem.
2. No Transactions Carried Out
It is natural that when Ethereum transaction fees are high, no user would be willing to process payments. Due to raised fees, transactions are also delayed. This has discouraged users from carrying out any transactions. So, it may drive users to other useful cryptocurrency Blockchain networks. This can end in the result of thousands of users migrating.
3. Loss of New Users
Users, who get to know about fee spikes, may not use Ethereum at all. Likewise, Ethereum may lose new users due to all news about its fees spikes in the market.
In such a high transaction fee environment, Ethereum may lose its usability, and functionality in the eyes of users. If users are unwilling to transact due high fees it can threaten whole ethereum Ecosystem.