Gas prices on Ethereum have spiked to their highest level in more than a year. Prices tanking across the entire industry have investors rushing for the exits and driving the cost to use the network up.
After a rocky week or so, cryptocurrency prices made some of their most dramatic moves to date today. The market capitalization of all digital assets plunged as investors sold off almost $50 billion worth of digital currencies in a matter of hours.
Drops of 20 percent or more over the last 24-hours have seen the likes of Bitcoin temporarily fall below $6,000. Meanwhile, the native digital asset on the Ethereum network, ether, is currently trading for just $140 after starting the month at more than $220. In fact, literally the only digital currencies not reeling from today’s drops are stablecoins like USDT, DAI, and USDC.
The rush for the exits has not only caused prices to tank but also fees to skyrocket on the Ethereum network. According to data from cryptocurrency analysis firm Glassnode (@glassnode), the median gas price is now at 29 gwei:
#Ethereum's price drop has lead to massive network congestion. $ETH median gas price just spiked to 29 gwei – the highest it's been in over 1 year.https://t.co/RnoIRxrdkG pic.twitter.com/KpOEfpWGWe
— glassnode (@glassnode) March 12, 2020
The gas price rises when block space on Ethereum is in high demand. Given that gas powers the decentralized applications built on Ethereum, gas volatility plays havoc with many projects’ business models.
As BeInCrypto has previously reported, surging demand for Ethereum has seen the network grind to a halt before. The example of the popular Ethereum-based game CryptoKitties in 2017 showed the network’s shortcomings at the time. Today’s surging gas prices once again demonstrate that the network still lacks the capacity to facilitate the kind of enterprise adoption many are hopeful for.
According to Glassnode Studio, median gas prices just yesterday were around 9 gwei. At around 2.5x that today, the user experience at any decentralized application continuing to actually attract users on such a traumatic day in the markets will have surely been negatively impacted.
Upgrades in the form of Ethereum 2.0 aim to address fees in the future. Evidently, such changes are sorely needed if the smart contract platform is to ever make good on its ambitions as serving as decentralized world computer.
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