After getting absolutely pummeled and losing over 90% of its value over the course of 2018, ETH has had a mini price rally in recent weeks in anticipation of the impending Constantinople hard fork that is expected to be activated in the third week of January.
The Constantinople hard fork is the first major upgrade that paves the path for more significant future upgrades such as Casper, Sharding and eWASM that constitute Ethereum 2.0. The Constantinople hard fork is a non-contentious one, which means that all the full nodes have signalled their intention to fully comply with the proposed changes and update their client softwares accordingly. While most of the proposed changes in the Constantinople upgrade are centered around optimizing processes to reduce gas consumption, the plan to reduce the block reward to 2 ETH per block will have a significant impact on operations of ETH miners. With miners already operating on razor-thin margins following the 2018 price rout, it will be interesting to see how the reduction in block reward will affect the network hash power.
If you are perhaps wondering why the ETH team is slashing block rewards, it is to deter mining on the Ethereum blockchain as the protocol eventually transitions to PoS consensus algorithm. In addition, the activation of the mining difficulty bomb, which makes it exponentially harder and therefore uneconomical for miners to mine Ethereum, is going to be delayed by roughly 12 months. We think the primary reason behind this delay is the uncertainty around the timing of the launch of PoS and the possibility of the chain freezing if the transition to PoS is delayed. However, the final transition to PoS with Casper 2 will significantly mitigate the intense energy consumption requirements that the current PoW algorithm demands.
Again, the Constantinople hard fork does not materially alter the performance of the Ethereum blockchain and should be thought of as a foundation for bigger upgrades that are currently in the pipeline. Besides the incremental improvements to transaction throughput from minor efficiency improvements, the hard fork also improvises the optimization of state channels, which could allow second layer solutions to implemented with more ease.
Looking beyond the Constantinople hard fork, the next set of upgrades in the pipeline are extremely crucial for Ethereum in order to address its current shortcomings around scalability and the expensive gas consumption needs for running various smart contracts. As we discussed some time ago, it is important the Ethereum executes well on this roadmap. There are clearly advantages that incumbency bestows. However, competitors including Dfinity, Tezos and Polkadot are redesigning smart contracting platforms from the ground-up, and any slip-up from ETH could see any of these worthy rivals gaining at ETH’s expense.
Even more than in the case of bitcoin, therefore, the next 12 to 18 months will be extremely crucial in determining Ethereum’s long term future.
“Samourai Removes Security Features on GPlay” Crypto wallet Samourai has removed security features introduced in its latest app update after Google Play found them to be in conflict with its store policies. The app accused Google Play of being extremely restrictive to become a “walled garden”. According to the company, Google had rejected an exemption that the team had applied for months ago, despite the argument that removing such functionality would cause users who rely on those features to be less secure and more exposed.
“Canaan May IPO in the US” According to Bloomberg, Canaan Creative, the world’s second-largest manufacturer of cryptocurrency mining hardware, is now considering going public in the United States instead of Hong Kong. According to sources, the ASIC manufacturer is looking into the possibility of holding its initial public offering (IPO) in New York in the first half of this year. However, the discussions are at an early phase and there is no guarantee (yet) that the plans will materialize.
“ShapeShift Lays off 37 Employees as Winter Continues” Switzerland-based cryptocurrency exchange ShapeShift has laid off a third of its team, according to a company blog post. The post, titled “Overcoming ShapeShift’s Crypto Winter and the Path Ahead”, stated that ShapeShift has laid off 37 of its employees, reducing the size of its team by a third. In the post, CEO Voorhees attributes the staff cuts to the “latest bear market cycle,” noting that the company’s “greatest and worst financial decision [was] to embrace substantial exposure to crypto assets”.
“Lingham Predicts More Pain in Near Term”In a recent interview, Vinny Lingham, a prominent crypto entrepreneur, investor and a “shark” on South Africa’s Shark Tank panel maintained his negative outlook towards the crypto market in the near term. Lingham noted that as it stands, a majority of people are “very skeptical about cryptocurrencies”. He further explained that for many proposed/in the works blockchain projects, the improvements envisioned are quixotic and likely unattainable at current development rates.
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