Weekly Blockchain Industry Report-21th Issue: Ethereum delayed the “Difficulty Bomb”

Published in

OK Research

6 min readSep 19, 2018

(September 1st–September 7th, 2018)

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Market Overview

This week, the daily average global cryptocurrency’s market capitalization was $228.517 billion, representing a 3.83% increase from last week. Among them, the Top 5 cryptocurrencies’ market cap increased by 1.78%;The daily average transaction volume was $13.99 billion, representing a 20.08% increase. Meanwhile, the Top 5 cryptocurrencies’ transaction volume increased by 19.42%. All of them had price decrease, ETH experienced a maximum decrease of 27.57% and EOS had a maximum decrease of 26.15%.

Among the top 10 cryptocurrency gainers this week, most of the projects were in the direct application field. Webcoin, a token in advertising industry, experienced the greatest increase in price by 223.21%.

Analysis of Top 200 Market Cap Projects

Until 12:00 p.m. of the releasing date, the market capitalization of the top 200 projects increased by 8.12% compared with last week. Based on our classification of 4 categories: cryptocurrency and payment, basic chain and protocol, vertical chain and protocol, and vertical industrial application, the projects of the vertical industrial application sector decreased the most.

Through further classification of the vertical chain and protocol and the vertical industrial application sectors, it was found that IoT sector experienced market cap increase as high as 13.93%, but notary field’s market cap decreased by 41.75%.

Analysis of Newly Listed Projects

According to latest announcements from more than 30 exchanges including OKEx, Binance, Huobi, Bitfinex, Bithumb, ZB.com, Upbit, HitBTC, Bittrex, Poloniex, there are 9 newly listed cryptocurrencies and 12 newly listed trading pairs. OnlyDOGE/USDT, NCASH/ETH and ZEC/USDT increased in price, other tokens’ price went down.

Analysis of Closed Public Offering Projects

There have been 56 closed public-offering projects this past week, with the soft cap totaling nearly 438 million USD. Among these projects, asset management’s projects have the largest soft cap, exceeding 70 million USD.

Important News on Global Governmental Policies this Past Week

Turkey: The Borsa Istanbul Stock Exchange announced its development of a blockchain platform.

Russia: Authorized by the central bank, the Russian police recently impounded cryptocurrency ATMs. The ATM developer lodged an appeal.

China: The Digital Currency Research Lab of the People’s Bank of China (PBoC), the country’s central bank, has founded Shenzhen Financial Technology Co., Ltd, in Shenzhen, for blockchain trade financing.

Colombia: Colombia’s President Ivan Duque recently pledged that if blockchain technology can create a certain number of jobs, the Colombian government will pursue lower taxes for cryptocurrency and blockchain startups for five years.

Greece: The number of digital currency ATMs will double in multiple Greek cities.

Japan: The Financial Service Authority (FSA), Japan’s financial regulator, will make the registration review process for cryptocurrency exchanges more stringent.

Keeping Up with the Blockchain Giants

September 1st

LINE has become one of the first listed companies to launch a proprietary blockchain network with its own cryptocurrency. The company announced that its creation block of LINK Chain was created on August 23. A total of 1 billion LINK tokens will be released over time.

September 2nd

WeBank Technology Director Wan Lei said that WeBank is incubating about 16 blockchain application projects, most of which are however still in testing.

September 3rd

Google has integrated Ethereum into its big data analysis platform BigQuery, in which users can view Ethereum blockchain data. All Ethereum blockchain data sets will be updated on a daily basis.

September 4th

JD Group and RuYi Holdings recently entered into strategic cooperation to help RuYi improve its competitiveness in blockchain counterfeiting prevention.

September 5th

Business Insider reports that Goldman Sachs will shelve its plan to create a cryptocurrency trading platform, because the cryptocurrency regulatory framework remains unclear. Foxconn Blue Collar Technology General Manager Li Hongming said that blockchain and other technologies will be applied to businesses related to consumer finance.

September 6th

Suning International has used blockchain traceability technology in the direct harvest of bluefin tuna in South Australia.

September 7th

NetEase’s swordsman game Justice Online, with blockchain technology, was officially launched on September 7.

Hot topic of this week: Ethereum delayed the “Difficulty Bomb”. As compensation, block rewards will be reduced to 2 ETH to help Ethereum achieve successful transition from PoW to PoS

On August 31, after one month, the final result of the Ethereum block rewards system vote came out. Of the ETH participating in the voting, 150,821.4 ETH (approximately 99.7%) supported reducing the block rewards to 2 or 1 ETH per block (finalized at 2 ETH). Only 348.7 ETH (about 0.03%) supported raising or maintaining the current amount. An agreement was reached on the delay of “difficulty bomb” implementation (which will increase ETH mining difficulty).

Background

Ethereum founder Vitalik Buterin has divided Ethereum’s development into four stages: Frontier, Homestead, Metropolis and Serenity. Ethereum is currently in Part 1 of its third stage, Metropolis: Byzantine. When Serenity, the final milestone, is achieved, it will embrace a major change: transition from Proof-of-Work to a Proof-of-Stake consensus.

Back in the Frontier stage, the “difficulty bomb” was incorporated into the Ethereum blockchain and was scheduled to go off in stage 3. The start of the “difficulty bomb” will exponentially increase mining difficulty and block time, making it mining impossible. Eventually ETH based on PoW consensus will lose its attraction to miners, the number of miners will gradually decrease, and the difficulty of reaching a future agreement on an upgraded blockchain based on PoS will be reduced considerably, thus completing the smooth transition from PoW to PoS.

Before entering the final stage, Serenity, the Constantinople Hard Fork, if miners cannot be stopped from continued PoW mining, three Ethereum cryptocurrencies will be created: ETC, ETH-PoW, and ETH-PoS. This will not only hurt Ethereum’s credibility and economic value, but will also dilute the hashrate for the entire system, making it more vulnerable to hacking.

What Does the Voting Result Mean?

This vote to delay the implementation of the “difficulty bomb” is actually a concession to Ethereum miners. As compensation, block rewards will be reduced from 3 ETH to 2 ETH.

But the delay does not mean cancellation. It is expected that by the end of 2019, the “difficulty bomb” will officially commence. At that time, the difficulty of Ethereum block will increase sharply, block time will be extended indefinitely, and block rewards may be further reduced. When Ethereum is upgraded to Serenity, the PoS mechanism will be in full swing. At that stage, Ethereum will become a blockchain business empire with bank-level processing speed. Its programming language will be used by developers, companies and the real economic entities to create contracts, applications and systems.