So you may have heard that there’s an upcoming update on the Ethereum blockchain named “Constantinople”. This upgrade is set to bring some much-needed improvements to the Ethereum blockchain, however, not everyone is in agreement with some of the changes proposed by the Ethereum dev team and this could lead to another Ethereum hard-fork. But what exactly is Constantinople? And what does it mean for ETH hodlers and traders?
What is Constantinople?
Constantinople is a set of upgrades designed to address some key issues faced by the Ethereum blockchain, one of which is scalability. If you have been keeping an eye on the Ethereum blockchain for a while now, you without a doubt would have heard about how a dApp named CryptoKitties stalled the Ethereum network. Ethereum is also facing a lot of competition from other dApp platforms with faster more scalable blockchains and as a result, Constantinople has been designed to address this issue by changing the Ethereum consensus mechanism from PoW (Proof of Work)to PoS (Proof of Stake). This should speed up the network quite significantly as it allows for faster throughput because a random block producer is chosen to bundle up transactions instead of having miners race to solve computationally (and time) intensive puzzles. The argument against PoS, however, is that it allows the rich to get richer because more mining power is given to those who stake more ETH which leaves those with less ETH at a disadvantage.
Another proposed improvement under the Constantinople hard-fork will be an improvement to the EVM (Ethereum Virtual Machine), the engine which executes the code in smart contracts. This upgrade aims to make smart contracts cheaper to run and execute by reducing the amount of GAS required to run them. The Ethereum devs are also looking to address the issue of scalability by introducing “State Channels” similar to Bitcoin’s Lightning Network, this will allow some Ethereum transactions to be settled “off-chain” in order to reduce the load on the main Ethereum blockchain.
One of the most controversial of the proposed changes this upgrade presents is the Ethereum difficulty bomband the reduction in the block reward. The reduction to the block reward may seem odd at first, as it at first glance seems like something that removes the incentive for miners, however by reducing the block reward the supply of ETH will reduce dramatically, meaning there will be less ETH in circulation and some speculators say will help to push the price of ETH.
How does it affect you?
Unlike most hard-forks it is not certain whether there will be a complete split in the chain resulting in the creation of a new coin, as this is a non-contentious hard fork (unlike that of Bitcoin (BTC) & Bitcoin Cash (BCH) or that of BCH & BSV). The plan is for the old chain will simply die and all Ethereum users will be automatically moved onto the new Blockchain. In this case there will not be any noticeable change or effect on the Ethereum (ETH) end user. Which unfortunately means, no free coins. However in the case that there is a complete split and a new coin is created, here at currency.com we have decided to support both coins. So all users who have ETH in their balances should receive the new coin as soon as technically possible. This hard-fork could potentially lead to volatility in the price of Ether, only time will tell which direction it will move in, one thing is for sure, this may be the most significant fork in Ethereum’s relatively brief history and will definitely be worth keeping an eye on.
Important things to bear in mind during the fork
1) We will freeze ETH deposits and withdrawals in a certain amount of blocks in advance before the fork. The exact time is determined when we know the block number which triggers the Hardfork.
2) All users must pause transactions with us when alerted to do so. We will alert all users as to when they may resume their transactions with us.
3) No explicit actions are needed the users’ side.
4) If you send ETH to us in between during the fork period we might not receive your funds, this is because they may land on a different side of the blockchain to the one we may be on at the time. Essentially it’s like having two menus in the restaurant. You need to make sure you and waiter read the same menu. Otherwise, you may not get the meal you ordered.
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