On the first day of the month of August, the Bitcoin blockchain got split and gave rise to a completely new currency – bitcoin cash. The miners backing the bitcoin cash blockchain were successful in officially branching off and ultimately added blocks to a new and separate blockchain. The backers of bitcoin cash believe that an economy can be built around the new currency and its blockchain.
In the light of this, there is an expected update of the Ethereum blockchain. Ethereum is currently the second most popular cryptocurrency after bitcoin. This update of the Ethereum blockchain is called the Metropolis and it will be the third of four planned stages of the blockchain’s development.
In fact this Metropolis update of Ethereum is expected to be in two parts; two hard forks – Byzantium and Constantinople. The fork is projected to occur between the 22nd of September and the 27th of October.
Some Benefits of the Metropolis
To the regular ETH holder, a better experience with the blockchain will be a welcome development and this is exactly what the Ethereum update seeks to do. It is expected that with this update, the Ethereum blockchain will be more secure and also will be more robustly equipped against any potential hack attempt by quantum computers.
Ethereum’s anonymity is expected to be enhanced through the integration of Zcash’s cryptographic engine (zk-SNARKS). This will enable direct order and trade executions between the Ethereum and Zcash blockchains.
Ethereum mining will be moved from proof-of-work to proof-of-stake which will help reduce the amount of electricity consumed in mining the cryptocurrency. The decision about mining difficulty was however been delayed but rewards to miners have been reduced. Additionally, it is expected that there will be reduced centralization risks.
Effect of Metropolis on ETH’s Price
Unlike the bitcoin hard fork that seemed to garner much media traction, Ethereum’s hard fork has not been as widely discussed. Considering that block rewards to miners will be decreased from 5ETH to 3ETH, and the expected delay in the increase of mining trouble, there is an expected reduction in the amount of coin in circulation and this could drive up the price of ETH.
The demand for ETH is expected to witness a significant rise as the date for update approaches despite the fact that we are yet to see any significant increased demands with announcements in this regard thus far.
Another point of important note is the fact that the community has a very structured voting procedure to reach consensus. This is clearly demonstrated in the way the vote to reduce the miners’ block reward turned out and also how the community voted to delay the mining difficulty as carried out by Carbonvote. This gives investors and ether holders a high degree of confidence in the decision making process should issues arise.
It is also important to note that there will likely be price volatility along the way. This volatility can be generally due to the larger cryptocurrency market. Volatility could also arise due to any unforeseen challenges that may arise with the technology during the upgrade. We however remain upbeat because the Ethereum team is very much aware of the existing and future challenges and limitations of the blockchain and are constantly working to improve it. With their collective efforts and experience, the intrinsic value will likely remain intact.
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