Connect with us

Blockchain

Coinbase Pro passes gas fees to users as ETH miner revenue hits 5 year high

Published

on


Ethereum miners’ hourly revenue has hit a five-year record, with fees currently bringing in 2,275 ETH ($880K) per hour.

The spike was triggered by yesterday’s announcement that Uniswap would airdrop it’s governance token UNI to past users of the decentralized exchange. Following the UNI announcement, more than 70,000 users rushed to claim free tokens and the gas price surged past 700 Gwei.

Crypto analytics firm Glassnode tweeted that fees had topped $1 million in an hour:

Following UniswapProtocol’s announcement of the $UNI token today, #Ethereum saw a massive surge in miner fees. Almost $1M USD in fees were spent in a single hour!

These figures dwarf the daily revenue earned by miners during the late 2017 bull run, which peaked at a little over 1,000 ETH per hour.

Ethereum miners’ hourly revenue. Source: Glassnode

The sky high fees are pushing ordinary users out of the system, and hurting the bottom line of major exchanges. U.S. crypto exchange Coinbase Pro announced earlier today that it will no longer cover network fees much to the disappointment of users.

“Historically, Coinbase Pro has absorbed these fees on behalf of our customers,” it said. “However, as crypto has begun to gain broader adoption in applications like DeFi, payments and other projects, networks have gotten busier.” Other exchanges are reportedly considering following suit.

Three Arrows Capital co-founder Su Zhu said the high fees have made the Ethereum network basically unusable, calling it “absolutely atrocious”.

Numerous other users reported transactions taking hours or failing. Miners are financially incentivized to process transactions with the highest fees first, resulting in a massive backlog of the transactions with lower fees.

Further adding to the network bottleneck, each block has a limit on the amount of gas that can be included in it — reducing the number of transactions that can be confirmed in the block as fees increase.

The network congestion is driving users and developers to seek alternative solutions. Binance Smart Chain (BSC) has seen increased growth this week with Binance founder and CEO CZ boasting the platform hit 40% of Ethereum’s transaction volume on Tuesday this week.





Source link

Blockchain

Crypto credit cards could be the missing link to mass adoption

Published

on

By



Out of the many routes available to the mass adoption of cryptocurrencies, which includes decentralized finance (DeFi), layer-one protocols, nonfungible tokens and stablecoins, perhaps the simplest and most applicable path for the public at large is the ability to utilize cryptocurrency for everyday purchases with an integrated debit or credit card.

2021 has seen a growing number of companies offer cryptocurrency-based credit cards that give holders the chance to tap into the value of their cryptocurrencies for daily purchases, but is this just the latest gimmick being used by businesses to earn a buck or a real sign of mass adoption?

While the traditional financial sector isn’t discussed much in this newsletter because its focus is on exploring the various sub-sectors of the cryptocurrency ecosystem, crypto assets are quickly becoming a new investment class recognized by the global financial system.

Debit cards tap into crypto holdings

It’s important to clarify the differences between the card services offered by some of the largest players in the game including Crypto.com, BlockFi and Coinbase.

Debit cards like the one offered by Crypto.com allow users to convert their cryptocurrency holdings to a stablecoin that can then be transacted on Visa’s global network.

The Coinbase card and crypto debit card offered by Uphold provide a similar service, with both offering rewards for use in the form of a percentage of each purchase, paid back in Bitcoin (BTC) or another cryptocurrency, depending on the platform.

Being able to make purchases with your holdings may help bring a good use case to the cryptocurrency ecosystem, but it also goes against the “hodl” nature of many investors who subscribe to Gresham’s Law that “bad money drives out good money in circulation.”

When it comes to which money is spent and which money is saved, good money, or cryptocurrencies, in this case, will be saved while fiat currencies will be spent in daily transactions.

Crypto credit allows hodlers to continue accumulating

Credit cards like the recently launched BlockFi Rewards Visa Signature Credit Card do not require an upfront conversion of a user’s crypto holdings to pay for transactions. Instead, it offers a credit limit with an attached interest rate.

Gemini exchange plans to offer a BTC cashback rewards card on the Mastercard network. This is another example that has taken the approach of the legacy credit system by offering rewards and charging interest on carried balances.

Users can spend fiat currencies and earn cashback rewards that are paid back in the form of Bitcoin.

Paying in dollars while stacking stats lines up more with the idea of spending bad money in daily transactions while earning more crypto, but it does require users to have fiat currencies to spend.

In the case where someone only has cryptocurrencies, they would be forced to convert some of their holdings to the accepted form of repayment and possibly incur a taxable event, depending on the laws where they live.

Currently, most of the world’s population either still uses the traditional financial system or is part of the large population of the unbanked who are outside of all systems. The injection of blockchain technology and cryptocurrency is either adding another step to the process or offering a new way into a financial network.

For die-hard crypto fans that hold as much of their wealth as possible in cryptocurrency, debit card options that allow users to spend their holdings may provide the best option.

Since many crypto investors work jobs that still pay in fiat currencies, credit card options offer a way to use their income to make purchases while also continuing to accumulate without having to conduct the conversion to crypto themselves.

Related: Bitcoin payments for real estate gain traction as crypto holders seek monetization

Legacy networks will eventually integrate blockchain technology

Visa and Mastercard have fully embraced the integration of cryptocurrencies and blockchain technology into their networks. Visa recently reported that its crypto-enabled cards holders spent more than $1 billion during the first half of 2021.

It’s possible that in the near future, the entire network could be blockchain-based and users will be interacting with digital currencies on a regular basis without even knowing it.

How it all plays out long-term is anyone’s guess, but the current trend of companies releasing cryptocurrency-related debit and credit cards shows no signs of slowing down. They are a tried-and-true marketing tactic used in industries large and small to help entice new users.

Want more information about trading and investing in crypto markets?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.