There are 3 hard forks lined up in January 2019:
· Classic Vision Hard Fork — 11 January 2019
· Ethereum Nowa Hard Fork — 12 January 2019
· Constantinople Ethereum Hard Fork — 16 January 2019
On 29 December 2018, Ethereum gained back its old position, the second place on the crypto market ranking with a market capitalization of $15,293,262,380, and is valued at around $150 USD. The possible reason for the double of Ethereum’s market capitalization from around $8 billion to around $16 billion could be the bullish expectation brought by the upcoming a series of Ethereum hard forks.
What Led to the ETH Hard Forking and Why Is It Important?
Ethereum has lost 90% of its value since its all-time high in 2018. The possible causes of the price plummet could be the ICO phenomenon, scalability issues, energy inefficiency and centralization risks.
The developers have figured out that the difficulty bomb programmed into Ethereum has caused the blocks to become extremely slow after a point, after which no more blocks can be mined. Thus, a hard-fork is needed periodically to keep Ethereum get updated with the latest technology.
As per Ethereum Improvement Proposals (EIPs) suggest, the Constantinople hard fork will implement few major changes related to the improvement of Ethereum blockchain performance and mining rewards where Casper Protocol will see Ethereum switch from PoW to a PoS system.
While the impact of ICO selling could persist throughout this bear market, the successful switching from PoW to PoS could overcome the scalability, energy inefficiency and centralization risks currently facing the Ethereum network, Ethereum price could be picking up again.
Ethereum Hard Forks Explained
- Classic Vision Hard Fork (ETCV) — 11 January 2019
An entirely new cryptocurrency which will be spun off from the main Ethereum blockchain called Ethereum Classic Vision (ETCV) will be created after the Ethereum hard fork on 11 January 2019. This new currency claims to leverage the best of both the Ethereum Classic and the Ethereum:
- Decentralization
- Scalability
- Security
- Transaction Speed
Important points about ETCV hard fork:
- The individual miners can profit from this as the costs will be lower and they can use as simple hardware like Raspberry Pi.
- ETCV holders could earn more coins by staking them instead of selling, which will increase the value of ETCV, instead of plunging.
- It will remain independent from any central authority, as there is no risk of gigantic mining pools taking over the control of the blockchain.
- The Ethereum Classic Vision (ETCV) dApp platform will feature both back-end and front-end development tools, enabling the users to build a complete application with an attractive UI and additional native apps for Android and iOS without recurring to third-party services.
- ETCV network can process up to 10000+ transactions per second (TPS) instead of only 25 transactions per second in case of ETH.
All the Ethereum holders will get 3 ETCV (Ethereum Classic Vision) coins for every Ethereum (ETH) in their private wallets.
Check out ETCV Whitepaper if you would like to learn more about Classic Vision Hard Fork.
2. Ethereum Nowa Hard Fork (ETN) — 12 January 2019
Ethereum Nowa Fork will happen on the day after the Classic Vision Hard Fork. Ethereum owner will get 1 ETN (Ethereum Nowa) coin for every Ethereum (ETH) in their private wallets. Ethereum Nova is also offering additional Nowa tokens to investors ICO-style at an undisclosed “preferential rate” through the project’s website.
The ETN Nowa roadmap says that it is going to come up with ETN desktop wallet by Q2 2019, and even mobile wallets (Android, iOS, WP). By Q3 and Q4, the Ethereum Nowa decentralized exchange and blockchain messenger is expected to be launched.
Both Classic Vision and Nowa hard-forks raise a debate as there is a warning of a potential scam related to the hard-forks from few users on the BitcoinTalk forum. Do Classic Vision and Nova hard-forks represent a serious threat to the cohesion of the Ethereum community or are they just a project looking to piggyback off the headlines being generated by Ethereum’s Constantinople fork?
Whether both the Classic Vision and Nova projects are a long-term success or failure, it is of little importance to current Ethereum holders as Ethereum holders will get free ETCV or ETN token in the ratio as per promised should the projects are successful. However, should you ever be interested to make any contribution to the crowd-sale before the hard-forks, it is advisable to do your own research and diligence before investing.
3. Ethereum Constantinople Hard Fork — 16 January 2019
The Constantinople Ethereum hard fork (the 2nd phase of Metropolis project) is the major, the most significant and long-awaited Ethereum hard fork. The Constantinople Ethereum hard fork is expected to be built on 7,080,000 blocks, improving efficiency and performance. This is undertaken as a step to transit from Proof of Work (PoW) protocol to Proof of Stake (PoS) protocol (Casper protocol). Casper protocol is expected to make the Ethereum network faster and less costly to operate. It might be controversial as it would decrease the miners’ reward from 3 ETH to 2 ETH as well.
- EIP 145: An upgrade which will efficiently detail and process the information processing on the Ethereum blockchain known as bitwise shifting. This will use 10 times lesser gas than before, which eventually would make the smart contracts cheaper to use.
- EIP 1052: Optimising large scale code execution on the blockchain. Unique hash adoption would make the other contract verification easier as well as efficient.
- EIP 1283: The pricing method will be made fairer and simpler in case of contract storage (SSTORE opcode). It would lower the gas cost as new uses would be enabled for data storage.
- EIP 1014: Vitalik Buterin made scaling solution based on off-chain transactions and state channels similar to Bitcoin’s Lightning Network, which will automatically improve the performance of the network.
- EIP 1234: The reduction in block mining reward would delay the difficulty bomb for a period of 12 months. This would create ruckus amongst the miners as their block reward would decrease as happened earlier during the Ethereum Classic(ETC) hard fork. So, this difficulty bomb would make it impossible to mine after a certain point and would freeze the entire network, hence its also known as Ethereum’s ice age. The developers would keep on improving and the miners have to adopt the update, else wouldn’t be able to profit from mining.
As the developers are sceptical about the update and want to ensure the Casper update is safe, this got delayed few times. Approximately around 5,500 blocks would be created every day, if every 15 seconds a new block keeps on getting created, which would definitely put pressure on Ethereum’s value, and can prevent inflation.
The Constantinople hard fork is a part of infrastructure and protocol improvement for Ethereum blockchain, so we don’t expect any new coins from this.
You may check out more details about the changes made to the Ethereum network and track the progress of the Constantinople hard fork here.
The long-awaited Ethereum Constantinople hard fork which was scheduled to go live on the 16th of January 2019 could happen between 14th to 18th January 2019 depending on the targeted block height of 7,080,000.
What Should You Do as an Ethereum Holder?
It is being claimed that Ethereum owners will get 3 Ethereum Classic Vision (ETCV) and 1 Ethereum Nowa (ETN) for every Ethereum they hold after the Classic Vision and Ethereum Nowa hard forks. The owner will receive the new coins only if they have their Ethereum in a private wallet (Metamask, Ledger Nano S, Trezor) where they control the private keys.
For the owners who hold their Ethereum in the exchange wallet, they will only receive new coin if the exchange supports the respective hard forks. You can closely follow all the updates coming from the exchanges which hard forks your exchanges support.
It is advised that the Ethereum holders do not import the wallet private keys to any new unrecognized wallets promising free coins.
Check out the official announcement from Tokenize regarding the Ethereum Constantinople Hard Fork:
Possible Effects Of These Hard Forks On Ethereum & The Crypto Ecosystem
- Impact on the Price of Ethereum and Other Cryptocurrencies
The Ethereum Constantinople hard fork would definitely have a huge impact on the Ethereum price as it will transform the Ethereum into an updated version, and thus people are excited with the transformation it would bring. Therefore, it is being expected that the Ethereum price will be on the bullish trend and the other cryptocurrencies might suffer a downfall for a short period of time during hard forks. As of so far, the Ethereum rose by around 85% over 2 weeks time and its market capitalisation has doubled in the past one month.
Now, the question comes, how long will the price of Ethereum’s bullish trend sustain? There are some analysts and research anticipate the bullish trend would be short term and it happens before the hard fork. Based on historical market performance around the time of an Ethereum hard fork, the market fluctuations are best summarized in three phases:
- Before the hard fork, the price is usually at a rise;
- At the time of the hard fork — as well as shortly before and after — the price peaks, representing a short stage of uncertainty;
- Following the hard fork, the price of Ethereum usually corrects at different levels.
A similar trend also happened during or before Bitcoin Cash hard fork, wherein the other cryptocurrencies suffered for quite a bit of time.
In short, it is hard to predict the long-term impact of a hard fork. However, it is evident that the Ethereum is receiving a lot of attention before its hard fork and this is pushing the price up now. Some kind of short-term volatility is expected once the hard forks are completed.
2. The Chances of More Hard Forks and Airdrops During the Upgrade
The Ethereum Constantinople hard fork has received acclaim by many in the crypto space and achieved consensus across the Ether community. However, there remains a slim chance that there may be more hard forks as Ethereum community members and developers wish to conduct their own versions by upgrading the Ethereum network. Hence, there are some exchanges anticipate such a situation would happen and any projects wish to do the airdrop to discuss with the respective exchange.
Summary
Ethereum’s shift from PoW to PoS is a very big deal indeed. Casper is a complex and important update for one of the world’s largest digital currencies and, if successful, it could be key to overcoming the scalability, energy inefficiency and centralization risks currently facing the network. However, the switch to PoS isn’t without its own obstacles and risks, so it’ll be fascinating to watch how it all unfolds.
