Now Reading:
Ethereum Seeks to Prove a Crypto Fork Need Not Be Contentious
Full Article 4 minutes read

Ethereum Seeks to Prove a Crypto Fork Need Not Be Contentious

The term “fork” has acquired a negative connotation in cryptocurrency circles lately. A November software upgrade of the Bitcoin Cash network wiped out nearly half its market value. Yet for Ether investors, a pending update should be good news.

On Wednesday, the Ethereum network will move to a new version of its blockchain software know as a fork that is called Constantinople, which will bring along mostly under-the-hood technical tweaks. Unlike with Bitcoin Cash, Ethereum’s network isn’t expected to split into several versions, with various entities battling for their version to succeed.

“I really can’t imagine a less contentious hard fork, to be honest,” Ethereum core developer Lane Rettig said in a phone interview. “Of all the hard forks in the history of Ethereum, it’s probably the least eventful one.”

The biggest change will be a reduction in rewards to miners, whose computers support the network, to two coins from three per block. The tweak should reduce inflation of Ether, the third-largest cryptocurrency, with a $13.3 billion market capitalization. Because miners often sell the newly minted coins they receive to cover costs as well as take profits, the update could make Ether’s value more stable.

“Being that the inflation rate will drop by a third, it could potentially reduce selling pressure that could come from the miners’ reward,” Michael Moro, chief executive officer of Genesis Global Trading, which facilitates institutional buying and selling, said in an email. Ether stumbled 83 percent in 2017 and is little changed at about $127 so far this year.

The risk is that the lower payout could reduce incentives for miners to support the network — and that could potentially impact network security. If fewer miners chose to support Ethereum, that could increase the threat of a 51-percent attack, in which an entity starts falsifying transactions on the network, said Kyle Samani, managing partner at Multicoin Capital Management LLC. Ethereum split-off Ethereum Classic came under such an attack this year that has already resulted in more than $1 million in losses to entities like exchanges.

That said, miners rewards have also been cut after the last Ethereum fork in October 2017, and the network support hasn’t wavered.

Miners have long known that their rewards will eventually go to zero. Ethereum developers are planning to go from using miners to verifying transactions via a so-called proof-of-stake system in which so-called digital wallets that hold Ether will also confirm transactions. The switch has been in the works for years, and the first version of the software run without any help from miners will debut this year, Rettig said. Called Serenity, it will at first run in parallel with the existing, miner-supported network.

“They will be separate for a year or more,” Rettig said. “Then we’ll have tight coupling, two networks get merged together.” The current network is schedule to undergo another upgrade, called Istanbul, in October 2019.

Some miners are grumbling, because Ethereum developers haven’t included in Constantinople changes they asked for, which would make it more difficult for so-called Asics computers made by the likes of China’s Bitmain Technologies Ltd. to mine Ether.

“End users may not see the immediate benefits of these updates, but they will certainly benefit from less expensive contract interaction and new smart contract features that were previously out of reach,” Taylor Monahan, CEO of Ether wallet MyCrypto, said in a phone interview. MyCrypto moved to the new Constantinople software last weekend.

Input your search keywords and press Enter.
Secured By miniOrange