London Hard Fork: What It Is and Why It Matters For You

What does the London Hard Fork mean for Ethereum?

The London Hard Fork upgrade is an important step that Ethereum must take, before reaching the final destination of Ethereum 2.0. Right now Ethereum is based on a Proof of Work system, which means that miners preform complex mathematical operations, as a form of verifying the authenticity of the transactions. All the miners compete to be the first to mine a new block on the blockchain. After a miner includes a particular transaction they earn a transaction fee on top of the block reward. Ethereum’s current Proof of Work system can secure around 15 transactions per second, which sounds like a lot (at least compared to Bitcoin, which has less than half of that), but given how popular Ethereum has become, it is showing to not be enough. Right now, in times of high usage, users have to compete in order to secure their spot on the blockchain by paying larger fees, which can sometimes be over $100!

How To Trade it

If you’re looking to trade this event though, there are a few main things to keep in mind. First, long-anticipated events like that can be what we call “buy the rumor, sell the news” events, where the big players start selling at the moment the event happens, driving the price down. A typical example of this was the Dogecoin crash: on the day that Elon Musk went on Saturday Night live, new retail traders were buying since they were expecting the price to skyrocket. People that have been around longer, however, saw that this was the worst possible time to buy, and they were right: in a matter of days, DOGE crashed by more than 50%. Now, I’m not saying that something this insane will happen with ETH; unlike DOGE, ETH isn’t a ridiculously overvalued memecoin, but you should still keep in mind that some larger investors might sell the news on August 4th.

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