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Ethereum Set for January Spike, to Start Year on Positive Note With Constantinople

Ethereum Set for January Spike to Start Year On Positive Note with Constantinople

Ethereum has been earmarked by many cryptocurrency experts as heading for a massive spike in value early in 2019 as its Constantinople hard fork approaches.

Ethereum which recently lost its spot as number 1 altcoin by market cap to Ripple has developers hoping that its hard fork scheduled for January will make the transition from Proof of Work (PoW) to Proof of Stake (PoS) more effective and boost ETH’s market value moving into the new year.

In terms of development, Ethereum is lagging, while other competitors such as Ethereum Classic (ETC), Cardano (ADA), Lisk (LSK) and Quantum (QTUM) are progressing with far more intent. Despite “the sky falling” as some commentators have maintained, Joe Lubin, Ethereum co-founder, asserts that Ethereum protocol development is accelerating. He suggests that this will result in “the continued maturation of the token economy, which will see many exciting consumer utility tokens and tokenized security launched in the new year.”

The common view is that ETH is now well positioned for a price boost prior to the release of Constantinople, not only regaining its position as the leading altcoin platform. Clearly, though the Ethereum team is hoping for a more successful outcome than the last hard fork, Bitcoin Cash, leading to heavy market losses and a hash rate war.

Constantinople is scheduled for the middle of January 2019 and designed to increase the speed and efficiency of the Ethereum network, as well as making it more economically viable than the current status quo. Ethereum Classic (ETC) will still remain in play after the fork.

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Ethereum Hard Fork at Block 7,080,000 in January 2019

Ethereum Hard Fork at Block 7,080,000 in January 2019

The Ethereum development team has come to an agreement to deploy the Constantinople hard fork at block 7,080,000. Currently, Ethereum is near block 6.86 million, so this fork should happen some time between 14-18 January 2019.

The Constantinople hard fork was supposed to deploy in November 2018 but when had failed when deployed on the testnet in October 2018. After the failure on testnet, developer Afri Shchoedon made the accurate forecast that a fork was unlikely in 2018.

Ethereum has declined from USD 1,400 to less than USD 100 during 2018, and numerous companies and platforms launched via Ethereum are facing increasing enforcement pressure from the Securities and Exchange Commission (SEC) for unregistered issuance and trading of securities. This perhaps makes January 2019 a less than ideal time for a hard fork of the Ethereum blockchain, but the developers do not have much of a choice due to the difficulty bomb.

The difficulty bomb is programmed into Ethereum to cause blocks to become exponentially slower after a point, which eventually leads to an ice age where no more blocks are mined. This forces the developers to hard fork Ethereum periodically, and the point of this is to make sure Ethereum keeps on getting updated with the latest technology. The difficulty bomb is not going to be removed in the Constantinople fork, just delayed another 18 months.

The Constantinople hard fork may cause contention between investors and miners since it lowers the block reward from 3 Ether to 2 Ether. On the other hand, investors should welcome a lower inflation rate of Ether supply. However, miners have been struggling due to the collapse of Ethereum’s price and slashing the block reward by a third during this time could be seen as inconsiderate.

Lowering the block reward is already a heated issue but the Ethereum developers are rushing to implement ProgPoW, which would make ASICs incompatible with Ethereum mining. This move is likely to disenfranchise most of the major Ethereum miners.

The debate over this fork will intensify over the next month as the fork approaches and an Ethereum split is not out of the question, since the developers appear to have different views from the miners who are securing the network. Ethereum has already split once due to a hard fork over the loss of the development fund, since some of the community did not agree in reversing any transactions even if it was a hack, and this is how Ethereum Classic was born.

Yet another version of Ethereum could easily be born if a fraction of miners coordinate and decide not to upgrade their nodes to Constantinople. Indeed, miners who use ASICs have nothing to lose by doing this, since if ProgPoW is implemented their hardware will instantly become worthless unless they can succeed at keeping the current version of Ethereum alive.

 

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Reddit Founder Claims Crypto Market Needs a Crash Before Take Off

Reddit founder Alexis Ohanian has remarked in an interview with CNBC that he believes that a crash in the cryptocurrency market as seen over the past few days is needed in order for the market to stabilize and mature over time.

The Reddit entrepreneur feels that focus on software development and infrastructure within the cryptocurrency industry are important factors in building a stable future. He also suggested that the falls in cryptocurrency prices would have the effect of sifting out the undesirables in the industry from the genuine contributors, and those in for making quick money.

The Reddit founder feels that innovations being created now will have longevity and although blockchain pitches he has received may be fewer in number, Ohanian claims that they have more potential than those he was receiving in 2017.

Over the last few days, Bitcoin has suffered its biggest losses in over eight months. Although, after falling to USD 5,202 on 15 November, after a little price correction, trading picked up today at $5552.17 (time of writing). The newly hard forked BCH has fallen by 15% and is trading at $387.41. Brian Kelly, the founder, and chief executive officer of BKCM, has blamed the hard fork for the crypto market crash. Mati Greenspan from eToro says he saw it coming:

“The movement we saw today seemed to be the run-of-the-mill volatility surrounding Bitcoin and a breakout that’s been weeks coming….It’s difficult to say where it ends. No one can really predict.”

Forbes contributor Clem Chambers noted a correlation to the spike in the bond market:

“The obvious culprit causing this dump is Bitcoin Cash, the ‘wannabe’ Bitcoin usurper, which forked from Bitcoin last year. It is forking again and there are competing forks and all sorts of conniptions are expected. It sounds plausible this is causing the move but the fact the bond market spiked at the same time suggests something else is going on to me.”

Stephen Innes who heads up trading at Asia Pacific of Oanda Corporation suggested that the crash was an even worse scenario than he had anticipated and that pre-BCH online chat had the effect of creating doubt and uncertainty among investors.

Ohanian sticks with his view that the crash is necessary, arguing that during hard times people start to focus on the essentials.

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Ethereum Constantinople Hard Fork Fails On Testnet, Making Ethereum Fork Unlikely In 2018

The Ethereum Constantinople hard fork has been the focus of the Ethereum development community, and it is meant to bring a full suite of upgrades to Ethereum. Constantinople was deployed on the Ethereum Ropsten testnet at block 4.23 million on 13 October 2018, but it failed to work. Due to this failure, Ethereum developer Afri Schoedon thinks the Ethereum hard fork is unlikely in 2018.

no constantinople in 2018, we have to investigate

— 𝙰𝚏𝚛𝚒 𝚂𝚌𝚑𝚘𝚎𝚍𝚘𝚗 (@5chdn) October 13, 2018

After the Constantinople hard fork was implemented on the Ethereum Ropsten testnet it didn’t produce a block for 2 hours, and the first block it produced had zero transactions. At this time on 14 October, the Ropsten testnet is at block 4.236 million, but it is unclear if the testnet simply reverted back to original Ethereum after Constantinople failed.

A couple of different reasons have been given for the failure of the Constantinople hard fork on the testnet. Shoedon reports that there was a serious consensus issue, with a 3-way fork forming between Geth, Parity, and another Ethereum client.

Another reason given for the fork was that miners had simply not upgraded their nodes to Constantinople, so there was no one to mine blocks, explaining the stall at block 4.23 million. Ethereum developer Peter Szilagyi pleaded for other developers to start up a node running Constantinople to get the testnet blockchain moving.

Whether it is true or not that the lack of miners is the reason for this Constantinople testnet failure, it highlights how Constantinople has been very contentious for Ethereum miners. Constantinople lowers the block reward from 3 Ethereum to 2 Ethereum, which is catastrophic for many Ethereum miners that are already struggling. Ethereum’s price has declined from over USD 1,000 to less than USD 200 during 2018, making an intractable situation for most miners. Peer to peer pawning sites like LetGo and OfferUp are filled with Ethereum miners trying to liquidate their rigs since they are no longer profitable, even before this update.

On the other hand, Ethereum investors want Constantinople since it would lower Ethereum’s inflation rate. This creates a direct divide between miners and investors, making a community and blockchain split likely if the Constantinople hard fork included a block reward reduction. Ultimately, the miners get to decide which version of Ethereum is dominant, and in this case, the miners are not in agreement with developers, and there is nothing forcing them to implement this version of Constantinople.

There is a piece of code included in Ethereum which causes mining difficulty to exponentially increase at a point, this is called the difficulty bomb and leads to an Ethereum ice age where no more blocks are mined. This would be catastrophic for both miners and investors. This will force the Ethereum community to reach a consensus before the difficulty bomb goes off, or Ethereum will stop working. So if the Constantinople hard fork is not coming in 2018, certainly in 2019 some version of an Ethereum fork will be necessary to make sure the Ethereum ice age doesn’t happen.

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