Cryptocurrency predictions, altcoins and events to watch in August 2021
Ethereum, NFTs and blockchain gaming are set to take center stage this August.
Let’s take a look at which industries are set to dominate cryptocurrency this month, as well as a few tokens that could benefit if current trends continue.
Ethereum’s London hard fork (EIP-1559)
August is likely to be the biggest month for Ethereum (ETH) this year, as a major upgrade known as the London Hard Fork goes live. It consists of five Ethereum Improvement Proposals (EIP), which are a mix of technical and economic changes to the network. Together they are expected to reduce transaction fees, reduce network congestion and make ETH coins more valuable.
The most anticipated is called EIP-1559, which will make using Ethereum cheaper and, over time, reduce the supply of ETH coins by doing the following:
- Eliminating the existing auction market for fees in favor of a standardized base fee and an optional tip.
- The base fee will be automatically adjusted by the network, with the goal of preventing fees from soaring during peak periods.
- The base fee will be paid in ETH and will be burnt instead of sent to miners. Burning is the process of destroying coins by sending them to an address that no one can access.
- By burning ETH coins on every transaction, the supply of new ETH coins is predicted to reduce by 1-2% each year, or by about 2 million coins – although this is not guaranteed.
- Simple supply-and-demand economics suggests that over the long term, this should cause the price of ETH to appreciate due to increased utility combined with reduced supply.
NFT market sets new records
In addition to the London upgrade, the NFT market on Ethereum has begun heating up again.
Following a bearish period since late May, NFTs have rebounded with a record-breaking week in the final days of July. Here’s a recap of what happened.
- Trading volume for NFTs on Ethereum increased by 338% to $171 million compared to the same week a month ago.
- NFT marketplace OpenSea had its two biggest ever days of trading, with $35 million exchanged on July 31 and $49 million on August 1.
- CryptoPunks – one of the first-ever sets of NFT collectibles launched in 2017 – saw $78 million in trade volume, setting a new average price of $175,520 on OpenSea.
- The price floor — lowest price for an individual NFT — for several major collectible sets more than doubled.
Analysis suggests several whales and investment funds have been behind the recent surge, snapping up “blue-chip” NFTs such as CryptoPunks.
The founder of Consensys, an Ethereum technology and start-up incubator, Joe Lubin has also highlighted NFTs as the next frontier for Ethereum. He believes the technology will transcend art and collectibles to empower entirely new enterprise applications such as intellectual property rights, software ownership and expand existing media empires.
The renewed spotlight on NFTs from the big end of town shows continued confidence in the sector, which could cause retail speculators to re-enter the market in the coming weeks.
Other blockchains and tokens that might benefit from a resurgence in NFTs include:
- Flow. Developed by Dapper Labs, the team behind NFT pioneer CryptoKitties. Flow is a blockchain and token that hosts official NBA (Top Shots) and UFC collectibles.
- Rarible. Rarible is one of the largest Ethereum NFT marketplaces and is governed through the use of the RARI token.
- Immutable X. An Ethereum layer-2 solution designed specifically for NFTs and the ERC-721 standard that is used for most modern NFTs.
- Binance Smart Chain (BSC). The world’s largest cryptocurrency exchange recently launched a new NFT platform, which hosts assets on BSC as well as Ethereum.
Axie Infinity and blockchain gaming
Another growing sector, both on Ethereum and elsewhere, is blockchain gaming.
Axie Infinity (AXS) recently introduced the concept of “play-to-earn” to the world, which rewards players with cryptocurrency for playing games. The AXS token has grown by 400% over the past month, as the game made headlines around the world for enabling people in countries like the Philippines to earn a living wage just by playing the game.
While most blockchain-based games are currently low-fi or primitive compared to modern AAA titles, the play-to-earn model is so compelling that it is likely to be adopted by the $150 billion industry in a big way. Blockchains such as Enjin are already working hand-in-hand with game developers like Ubisoft as part of the Blockchain Game Alliance.
Gaming tokens have been dominating the trending coins section of CoinGecko and CoinMarketCap recently, which shows that this could be a popular sector for speculators over the coming weeks.
While it’s difficult to predict the next Axie Infinity, a project of note is Illuvium (ILV). It’s created by Kieran and Aaron Warwick, siblings of Kain Warwick, the creator of the hugely successful Synthetix derivatives trading platform. It leverages the Immutable X layer-2 chain, which will make it more scalable than previous generations of Ethereum-based games. This will allow Illuvium to get much closer to the quality of AAA titles as there will be fewer limitations for developers.
Similar to Axie Infinity, it revolves around teams of monsters that battle against each other. However, the team plans to take it further by introducing a 3D open-world and polished graphics in an attempt to bring blockchain gaming to the AAA market.
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Disclosure: The author owns a range of cryptocurrencies at the time of writing