In a striking twist, Ethereum has transitioned from a deflationary model to an inflationary one, with a 0.178% increase observed in the last 17 days. During this timeframe, the network's total supply expanded by an impressive 22,502 ether, equivalent to $35.31 million.
The Correlation Between Ethereum's Inflation and Onchain Downturn
In the past, Ethereum embraced a deflationary posture, largely attributable to the London hard fork's EIP-1559 and the significant transition from proof-of-work (PoW) to proof-of-stake (PoS). However, the recent months have seen a notable drop in onchain activities.
As a result, the fee-burning mechanism of the EIP-1559 has been consuming fewer ethers. Only 17 days ago, Ethereum's issuance rate was faintly inflationary, registering at 0.270% on an annual basis. Presently, it is at approximately 0.448%, indicating an increase of 0.178%.
The Amplified Inflation Rate and Ethereum's Supply
As of September 24, 2023, the total ether supply was 120,228,449. Fast forwarding to 11:00 a.m. Eastern Time on October 11, 2023, this number has escalated to 120,250,951. This growth signifies the addition of 22,502 ether, valued at $35.31 million, further substantiating the intensified inflation rate.
Ethereum's daily transaction rate has been plateauing, with layer two (L2) platforms gradually eroding its activity. Recent data from bitinfocharts.com discloses that Ethereum's average transaction fee is just 0.0012 ETH or $1.83, a low not witnessed since December 2022.
Analyzing Ethereum's Transaction Fees and Burn Rate
Going into the details, the network's median transaction fee is 0.00046 ETH or $0.726, according to bitinfocharts.com. As of October 11, ultrasound.money reports a burn rate of 0.57 ETH per minute, with a total of 5,783.55 ETH being destroyed in the past week alone.
Ultrasound.money highlights that a staggering 3,633,752 ether has been burned since the inception of EIP-1559 797 days ago, equating to an average burn rate of 3.17 ETH per minute. In the last week alone, the supply saw an addition of 10,321 ETH.
However, if PoW had continued to operate, this figure would have skyrocketed to 88,724 ETH within a week, as depicted by the web portal's simulated PoW data.
Ethereum's inflation rate increase is a subject that has sparked a lot of discussion and opinions. Users are encouraged to share their thoughts and views on this matter.
Frequently Asked Questions
How Much of Your IRA Should Include Precious Metals?
Protect yourself from inflation by investing in precious metallics like silver and gold. This is not only an investment for retirement, but it can also help you prepare for any economic downturn.
Although silver and gold prices have increased in recent years, they can still be considered safe investments as they don't fluctuate nearly as much as stocks. There is always demand for these materials.
Gold and silver prices are usually stable and predictable. They tend to increase when the economy is growing and decrease during recessions. This makes them very valuable money-savers and long term investments.
Ten percent should go into precious metals. That percentage could go higher if you want to diversify your portfolio further.
Can I invest in gold?
The answer is yes It is possible to add gold to your retirement plans. Gold is an excellent investment because it doesn't lose value over time. It also protects you against inflation. It doesn't come with taxes.
Before you invest in gold, make sure to understand its differences from other investments. Unlike stocks or bonds, you can't buy shares of gold companies. They are also not available for sale.
You must instead convert your gold into cash. This means you will need to get rid. You cannot just keep it.
This makes gold different from other investments. You can always sell other investments later. With gold, this isn't true.
The worst part is that you cannot use your gold to secure loans. For example, if you take out a mortgage, you may give up some of your gold to cover the loan.
What does that mean? You can't just keep your gold forever. It will eventually have to be converted into cash.
However, there is no need to panic about it. To open an IRA, all you need is to create one. Then you can invest your money in gold.
Are gold IRAs a good idea?
The best way to invest in gold is by buying shares in companies that mine for it. You should buy shares in these companies to make money from investing in gold and other precious metals such as silver.
However, there are two drawbacks to owning shares directly:
You can lose money if you hold onto your stock too long. When stocks decline, they fall further than their underlying asset (like gold). This could mean that you lose money rather than making it.
You may also miss potential profits if the market recovers before you sell. Therefore, you might need patience and wait for the market recovery before making any profit from your gold investments.
Physical gold can be beneficial if you prefer to keep investments separate from your finances. A gold IRA will help protect your portfolio from inflation and diversify it.
Visit our website to find out more about investing in gold.
Which type of IRA is the best?
It is crucial to find the right IRA for your needs. It is important to consider whether you want tax-deferred, maximized growth of your contributions, reduced taxes now and paid penalties later, or just avoid taxes.
The Roth option may make sense if you are saving for retirement but don't have much other money invested. It is also an option if you are still working after age 59 1/2. You can expect to pay income taxes for any accounts that are withdrawn.
Traditional IRAs are more suitable if you intend to retire young. However, you will most likely owe taxes on any earnings from those funds. The Roth IRA could be more beneficial if you intend to continue working after age 65. This allows you the freedom to withdraw some, or all, of your earnings.
What kind of IRA can you use to hold precious metals in?
A Individual Retirement Account (IRA), is an investment vehicle offered by most financial institutions and employers. Through an IRA, you may contribute money to an account that grows tax-deferred until withdrawn.
You can save taxes and pay them later with an IRA. This means you can save money and pay taxes later on the money that you have deposited to your retirement account.
An IRA is a great investment because your earnings and contributions are tax-free. You can withdraw funds at any time. If you do withdraw the funds earlier than that, you will be subject to penalties.
After 50 you can still make contributions to your IRA. There is no penalty. If you choose to take withdrawals from your IRA during retirement, you'll owe income taxes and a 10% federal penalty.
Refunds received before the age of 591/2 are subject to a penalty of 5% from the IRS. Between the ages of 591/2 and 70 1/2, withdrawals are subject to a 3.4% IRS penal.
A 6.2% IRS penalty applies to withdrawals exceeding $10,000 per annum.
- SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (sltrib.com)
- You can only purchase gold bars of at least 99.5% purity. (forbes.com)
- Same tax rules as traditional IRA SEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less Before setting up a Silver IRA, understand the fees and IRS restrictions. (sltrib.com)
- To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met: Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure. (stratatrust.com)
How to convert your IRA into a Gold IRA
Do you want to change your retirement savings away from a traditional IRA and into a golden IRA? This article will assist you in that endeavor. Here are the steps to help you make the change.
“Rolling over” refers to the act of transferring money into an alternative type of IRA (traditional), or vice versa (gold). Rolling an account over offers tax advantages. People may also prefer to invest physical assets, such precious metals.
There are two types IRAs – Traditional IRAs, and Roth IRAs. The main difference between the two types of IRAs is that Roth IRAs do not allow investors to deduct taxes from their earnings. If you invest $5,000 in a Traditional IRA now, then you'll be able only to withdraw $4,000. You could keep every penny if the same amount was invested in a Roth IRA.
These are the things you need to know if your goal is to convert from a traditional IRA or a gold IRA.
First, you must decide whether to move your balance into a new bank account or transfer funds from your existing account to the new one. When transferring money, you'll pay income tax at your regular rate on any earnings that exceed $10,000. If you decide to roll over your IRA you will not be subject to income tax on these earnings until you turn 59 1/2.
Once you have decided to open a new bank account, Most likely, you will need to present proof of identity such as a Social Security Card, passport, or birth certificate. You will then need to fill out paperwork proving that you have an IRA. Once you have completed all the forms, you will submit them to bank. They will verify your identity as well as give instructions on how to send wire transfers and checks.
This is the fun part. You'll deposit cash into your new account and wait for the IRS to approve your requests. After approval is granted, you will receive a letter saying that you are now allowed to withdraw funds.
That's it! All you need to do now is watch your money grow. And remember, if you ever change your mind about converting your IRA, you can always close it out and roll over the remaining balance into a new IRA.
By: Jamie Redman
Title: The Rise of Ethereum Inflation Amidst Decreasing Onchain Activities
Sourced From: news.bitcoin.com/ethereum-inflation-rises-as-onchain-activity-declines-35-31m-added-in-17-days/
Published Date: Wed, 11 Oct 2023 16:30:24 +0000