Ethereum transitions from PoW to PoS: What does this mean for users?

By Samyukta Narasimhan, Content and Growth Strategist at Moving

3 min readJul 7, 2021

You must have been hearing all the buzz around London Hard Fork launch on August 4th! But you must be wondering what exactly is London Hard Fork? Let’s break it down for you!

London Hard Fork and Eth 2.0 are the hottest new launches [Source: Coin Telegraph]

What is the latest update?

The Ethereum London Hard Fork is the latest development changing the blockchain’s transaction fee model and difficulty time bomb. To correspond with Ethereum 2.0 launch, developers are also delaying an intentionally built-in event known as the difficulty time bomb. EIP-1559, AKA the London hard fork, is the next step in bringing Ethereum closer to proof-of-stake. It aspires to solve the problem of rising gas and transaction fees on the blockchain. By burning the base network fee, it also intends to make ETH a deflationary token.

Ethereum moves from PoW to PoS [Source: BlockGeeks]

The most significant change of the update is obviously the transaction fees. Formerly, users entered a bid to pay their gas fees. Miners would prioritize transactions based on the fee added and use the fee as a reward for adding it to a block.

How is the community reacting?

This update has the biggest impact on the miners as the fees miners receive change even though miners are preparing for an end to Proof-of-Work with the release of Ethereum 2.0. This reduction could potentially lead to a decrease in the profits that miners make. Another concern is that Ethereum mining could become more centralized. Some argue that only the largest miners with the lowest energy costs will be able to operate at a profit.

Analysts and traders believe the Ethereum market has a lot of upward potential due to looming shortages the upgrade is set to bring. Ether’s shrinking supply and rising demand will increase its value.

“The reduction of Ether on exchanges is certainly a favorable indication”, according to Yuriy Mazur, head of the data analysis department at CEX.IO Broker. He says, “Investors are now looking for other ways to protect their ETH holdings amid the price drop rather than selling them directly for cash.”

What does it mean for users?

The current mechanism works similarly to a bid. The more you pay for transaction fees (or gas costs), the more likely your transaction will be picked quickly and validated by miners. But after the London update, you will no longer need to select the gas price you pay when making Ethereum transactions. Instead, you will simply see the base fee, plus an option to tip the miner.

Users are getting excited seeing the momentum build up as the launch date inches closer and closer as ETH price hits a 2-week high.

[Source: Trading View]

Final Thoughts

London will be one of the significant updates we’ve seen so far that directly impact users. The implementation of the London hard fork is still time-limited and temporary, testing the waters in a sense as The PoS transition of Ethereum 2.0 is planned for 2022.

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