Crypto Stocks and transactions on the Ethereum blockchain

  • 4 February 2021
  • Author: Cryptostock

Crypto Stocks are ERC20 tokens issued on the Ethereum blockchain and as such transactions can have costs and waiting times related to network congestion.

This article will try to shed some light on this. 

How do transactions work on Ethereum?

The Ethereum blockchain has “commission costs” which are called gas. Just as a car cannot move without fuel, a transaction on Ethereum cannot take place without gas. Gas is measured in gwei, a unit that corresponds to one billionth of an Ether. 

It is the miners who set the cost of transactions. Miners obviously care about profit, so they are more interested in validating transactions with higher commission costs, relegating to the background transactions where gas costs are lower. 

With the price of Ethereum rising to a new all-time high above $1,600 these days, volumes have also increased and the network is congested, resulting in higher gas costs.

To solve these problems, Ethereum is introducing a new consensus mechanism, Proof of Stake, which should increase the scalability of the network

When to trade to limit waiting times

While waiting for Ethereum 2.0 to become a reality, the problem can be mitigated by choosing better times to trade

Research by Flipside Crypto shows when the network is most congested. According to the data, the network is usually busiest from 1 PM UTC to 6 PM UTC, which coincides with the opening time of the US markets. These are also the times when it is still daytime in Europe.

Conversely, the least crowded periods are between 9 PM UTC and 11 PM UTC, which coincides with European night hours and the end of working hours in the US.

Trading at these times can reduce the waiting time and commission costs for each transaction. Crypto Stocks make this possible. Despite being linked to the price of the corresponding stocks on the stock markets, the Crypto Stock market operates 24 hours a day, 7 days a week. All that remains is to choose the best time and get started