Bitcoin mining took a big hit in 2018. 

For most of the year, mining activity operated below the threshold for profitability. The biggest name in crypto mining, Bitmain, ended the year by cutting 50% of staff and shelving plans for a stock market launch.

But what will 2019 bring? Will cryptocurrency mining become profitable again? In this article, we present an overview of bitcoin mining for 2019, touching on the biggest trends you need to know if you’re looking to get started.

Is Bitcoin Mining Profitable in a Bear Market? 

The price of bitcoin fell more than 70% in 2018, putting huge pressure on bitcoin miners. Mining profits fell 50% in one month alone (November) with the equivalent of 1.3 million miners going offline.

With cryptocurrency mining currently offering slim or zero economic return, what happens next?

Crypto mining profitability chart
Source: CoinTelegraph

It is definitely more difficult to justify starting a mining operation for most people. However, with fewer miners, there are greater chances to earn mining rewards.

There are a number of tools available that allow you to estimate potential profits or losses (here and here). These can be customized according to factors like crypto prices, electric costs, hardware specs.

Even under poor crypto market conditions, miners could decide to “hodl” any funds earned in hopes of a market turnaround. Clearly, 2019 price trends will go a long way in helping people determine whether or not to mine at all.

Layoffs at Bitmain

Bitmain is the largest cryptocurrency mining company on the planet. It supplies mining hardware and operates various mining pools.

If you’re looking into cryptocurrency mining, you need to know what’s going on at Bitmain.

In December 2018, Bitmain reportedly fired more than 50% of its staff, including its entire Bitcoin Cash (BCH) development team. The combination of huge losses and the major bet on BCH presents big challenges for the company moving forward. US IT firm UnitedCorp sued Bitmain, Kraken, Bitcoin.com, and Roger Ver for allegedly manipulating the BCH network. 

According to numerous reports, Bitmain was unable to liquidate its massive BCH reserves via cryptocurrency exchanges. Moreover, BCH was one of the worst performing cryptocurrencies in 2018. This only exacerbated the struggles of Bitmain. 

The company originally planned to open up a Texas-based data center that would cost $500 million and generate 400 jobs but has decided to put these plans on the backburner. Bitmain has also halted plans for a stock market launch, at least for now. Co-founders Wu Jihan and Zhan Ketuan plan to step down from the CEO position and remain on the board of directors. The likely successor is Wang Haichao, who is currently the product engineering director of Bitmain.

The Rise of Cryptojacking

Cryptojacking is another growing issue in the mining world.

At one point in 2018, cryptojacking replaced ransomware as the most popular form of cyber attack. Essentially, cryptojacking happens whenever person A uses person B’s computing power to mine cryptocurrency without person B knowing about it. In the early days of cryptojacking, it was more difficult to get hacked. This is because doing so required the installation of malicious software on a device.

Now, however, it’s possible to become a victim of cryptojacking just by visiting a website. With options like Coinhive, cryptojacking can be made possible by inserting a snippet of JavaScript code. The rise of cryptojacking presents new challenges for individuals and businesses both involved in the cryptocurrency space and not. Most online threat detection solutions don’t cover cryptojacking protection.

For cybersecurity experts, this has become a new issue to solve moving forward. Some major examples in 2018 included the arrests of 20 individuals in China who allegedly affected over one million computers with cryptojacking software. Additionally, In Japan, 16 individuals were arrested for a Monero (XMR) cryptojacking case.

Lawsuit Against Nvidia

The crypto bear market has weighed heavily on companies that supply chips for cryptocurrency miners. Nvidia, which produces microchips for gaming, AI systems, and crypto mining, had a rocky year in 2018.

In December 2018, Schall Law Firm announced the filing of a lawsuit against Nvidia, for “false and misleading statements to the market”. More specifically, Nvidia allegedly asserted that a decline in demand for GPUs used for cryptocurrency mining would not have a negative impact on the company’s operations or performance due to high demand for GPUs from gamers. 

While the stock market, in general, experienced declines in Q4 2018, Nvidia was hit harder than most. In addition, the timing lines up with its business performance. The day after Nvidia’s Q3 earnings report was released, Nvidia’s stock fell around 19 percent. One commenter said, “Stock went down for external reasons and no stock exchange listed firm can be sued for ‘force majeure’.” Another has said, “Assuming Nvidia made this statement, it could plausibly be grounds for a lawsuit, as it’s clearly in violation of securities rules.” 

No matter whose side you are on in this argument, it’s important to recognize how it could impact the cryptocurrency industry moving forward. What will be the result of this lawsuit? Will Nvidia focus on crypto-specific products moving forward?

Crypto Mining and Gaming: Asus and Quantumcloud 

One emerging trend in the mining community is harnessing the idle power of gaming rigs.

In November 2018, Asus announced a partnership with Quantumcloud. The solution is simple. Currently, there is a major surplus of gamers who use graphics cards only when gaming. For long periods of time, the capabilities of graphics cards are not being utilized. With this partnership, ASUS will allow gamers to be able to make use of idle graphics cards to mine cryptocurrency. There will also be options to cash out earnings through PayPal or WeChat. It’s still unknown which coins will be available as options for cloud mining with Quantumcloud software. We also don’t know if, or how much of the cut from earnings, will go to Asus or Quantumcloud.

Nonetheless, it is cool to see that major tech companies are still working on partnerships that involve the expansion of cryptocurrency mining even in the bear market. Additionally, this could create greater decentralization and egalitarianism to mining operations, and crypto supplies in general, by opening a new potential user base of miners.

The Ongoing ASIC Resistance Battle

ASICs (application specific integrated circuits) are designed specifically for mining cryptocurrencies. The rise of powerful ASICs has made it almost impossible to mine cryptocurrency on a PC or laptop; some crypto projects are fighting back and blocking ASIC mining. 

bitcoin miner

Instead of allowing miners to use ASICS, several projects are developing algorithms to block this possibility. Monero was probably the most well-known case of this in 2018.

Throughout the year, ASIC rigs designed for Ethereum mining started to emerge. In September 2018, it appeared that Ethereum was willing to let this go on without the implementation of a new algorithm in its upcoming release of Ethereum v3.5 (known as Constantinople). This is likely due to the fact that Ethereum is planning to switch from Proof of Work to Proof of Stake, which would eventually make all mining operations, (ASIC, GPU, CPU) obsolete. However, in recent weeks ahead of the January 2019 update, Ethereum developers have begun to implement an ASIC resistant algorithm anyway for Constantinople. 

So where does that leave the cryptocurrency mining community in 2019? There are still a few blockchains which allow ASIC mining to take place. Bitcoin (BTC) is a good example. Additionally, Bitcoin Cash (BCH) mining pools have adopted a protocol known as Asicboost which “can speed up the mining process by a factor of approximately 20 percent by reducing the gate count on mining chips.” 

Essentially, the protocol can be applied to all types of ASIC chips. For now, it appears that the ASIC debate will continue to be relevant throughout 2019 as technologies on both sides become more advanced.

Proof of Stake (PoS) Winning over Proof of Work (PoW)?

If the battle between pro and anti-ASIC sides wasn’t enough to change the landscape of crypto, the decision between PoS and PoW as the go-to consensus algorithm definitely is. As mentioned in our recent Ethereum roadmap article, the world’s second largest cryptocurrency by market cap is moving from PoW to PoS. Along the way, the reduced mining reward from 3 ETH to 2 ETH puts pressure on the miners until the switch to Casper (Ethereum’s PoS). 

The good news is that these changes are planned out pretty far in advance. However, it also presents new big picture questions for crypto projects, miners, and entire communities. If Ethereum’s change is successful in reaching greater scalability and making the network more decentralized, it will be interesting to see which projects follow suit. Ethereum isn’t necessarily a definitive trial test for the capabilities of PoS. 

Other projects (i.e. PIVX, NIX, etc.) have already made this switch in the past. However, none have been completed at this scale or with this degree of attention from the industry. It could ultimately lead to less reliance on PoW and mining. However, at the beginning of 2019, that is still yet to be determined. 

Top Mining Tech Trends to Watch in 2019

FPGA (Field-programmable gate array): In 2018, we saw the clear advantages of new types of mining equipment. As detailed above, ASICs demonstrated the capabilities of faster hash rates. However, they lack versatility and can’t be programmed to keep up with algorithm changes. Meanwhile, GPUs are much slower but a bit more versatile for mining various coins.

Now, FPGAs could emerge and offer a solution that is the best of both worlds. For instance, some FPGAs are 10x the speed of GPUs and can quickly change to different algorithms. Additionally, they are designed to use less electricity to run. 

As of the beginning of 2019, FPGAs have yet to gain user adoption despite being around since the early 2010s. This is mostly due to factors like high price points ($4,000 per card, or $25,000 – $30,000 per rig) and highly technical configuration requirements. Still, it would be interesting to see if new tech will emerge to make FPGAs more accessible to the average miner.

Mobile Mining: There are a few different mobile mining solutions available in 2019. DroidMiner BTC/LTC/DOGE Miner and Electroneum are two such examples for Android devices. Free Bitcoin is an option available for both Android and iOS. However, there is a clear lack of options for iOS and viable apps overall. 

The power of mobile devices simply hasn’t been enough to compete with dedicated mining rigs. Moreover, this type of mining would likely cause you to need to constantly replace mobile phone batteries. As a result, any profits are likely to turn to losses in a short amount of time. Still, it will be interesting to see if or how mobile mining can become more innovative moving forward. 

Conclusion

In summary, cryptocurrency mining operations continue to change along with the overall market. The struggle of everyone from small miners to large-scale enterprises in the past year is evident. However, the fact remains that crypto mining plays an important role in the validation of transactions for the vast majority of blockchains. Along with numerous challenges for miners, it’s also possible to find opportunities that could lead to more innovation.

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Ethereum hard fork constantinople

Ethereum will execute a hard fork this week named “Constantinople.” It is the first major Ethereum update of 2019.

The hard fork will take place at block number 7,080,000, expected on Wednesday 16th January.

So, what is Ethereum Constantinople? What upgrades will it bring? And do you need to do anything with your ethereum funds?

What is Ethereum Constantinople?

In simple terms, the Constantinople lays the technical groundwork for huge scaling plans in the future. 

Ethereum has a long roadmap, stretching into 2025, that aims to address congestion problems on the blockchain (the network almost ground to a halt at the end of 2017 when users flooded the system).

The Constantinople upgrade is the first step towards larger scaling ambitions. One independent developer referred to it as a “maintenance and optimization upgrade.” In other words, end-users shouldn’t notice too much difference.

Background reading: What is a hard fork in cryptocurrency?

Is it a contentious hard fork?

Hard forks are considered “contentious” when the community disagrees on the proposals. When that happens, there’s a risk that two competing chains emerge simultaneously.

We saw this happen with the Bitcoin Cash hard fork in November. Ethereum had its own contentious hard fork in 2016 when the community disagreed on how to deal with a hack. This hard fork spawned Ethereum Classic.

Constantinople, however, is not expected to be a contentious hard fork.

There is relatively strong support from miners across the board. The vast majority are expected to upgrade their nodes, and we won’t see two competing chains.

What upgrades will it bring?

The upgrade will implement five ethereum improvement proposals (EIPs).  They are as follows:

EIP 145 – Will result in a 91.4% saving in Ethereum gas costs through more efficient information processing methods. It relates to a process known as Bitwise shifting and requires the introduction of a native operation on the Ethereum Virtual Machine (EVM).

EIP 1052 – Makes it cheaper to process large smart contracts that only require a hash.  More specifically, this functionality returns the keccak256 hash of a contract’s bytecode. It improves upon the design of the EXTCODECOPY opcode.

EIP 1283 – This proposal aims to help smart contract developers by reducing gas costs related to changes made to data storage.

EIP 1014Introduces some off-chain transaction solutions to improve scaling possibilities.

EIP 1234 – Delays the “difficulty bomb” and reduces the mining reward from 3 ETH down to 2 ETH.

What is the difficulty bomb and why is it controversial?

The most controversial change in the proposal is the decision to delay the Ethereum difficulty bomb and reduce the mining reward.

The difficulty bomb is designed to progressively increase mining difficulty on the network. Eventually, it will become so difficult to mine Ethereum blocks, we will enter an “ice age.”

That process is designed to force miners away from Ethereum’s current “proof of work” system to “proof of stake.” Proof of stake is a more efficient algorithm that doesn’t require the vast computing power of miners.

The difficulty bomb will trigger the gradual shift towards the new algorithm by de-incentivizing miners.

The shift will also reduce the mining reward from 3 ETH to 2 ETH. It’s a somewhat controversial move as it will put economic pressure on the mining community. There’s also an argument that it will shift more power into the hands of large mining pools, which can afford to bear the economic costs in the short term.

Although some miners aren’t happy with the proposal, mining pools have indicated their broad support for the upgrade.

If you hold Ethereum…

… You won’t need to do anything with your funds. The hard fork should execute seamlessly and you’re unlikely to notice any difference or disruption.

Further reading: What is Ethereum? Absolutely Everything You Need To Know (A Beginner’s Guide)

crypto layoffs erik voorhees shapeshift

Edit: This list of crypto layoffs was updated on January 14th to include the latest restructures.

Crypto Winter has hit hard. The sharp downturn in cryptocurrency prices has forced blockchain companies to take drastic measures to ensure their sustainability. Late in 2018, crypto startups began to announce layoffs and restructures, including some of the biggest names in blockchain. Here’s what we know so far:

ShapeShift (third of staff)

Crypto exchange ShapeShift is the latest to announce layoffs which will hit 37 employees – a third of its staff.

In a passionate and honest Medium post, CEO Erik Voorhees said: “It’s a deep and painful reduction, mirrored across many crypto companies in this latest bear market cycle.”

Like many blockchain companies, ShapeShift’s balance sheet is comprised of cryptocurrencies, leaving them significantly exposed during the downturn. After rapid growth of 3,000% in 2017, ShapeShift expanded to include market tracker coincap.io and hardware wallet KeepKey. Voorhees cites a lack of focus on the recent decision to downsize: “they were pulling our attention in too many directions.”

Voorhees ended his statement with an apology to his former employees: “I am sorry this happened. Your confusion, your sadness, your anger… all of it is understandable, and I am sorry to put you through it. Your contributions — of effort, of personality, of experience — remain part of our fabric.”

ConsenSys (up to 60% of staff)

ConsenSys is a startup incubator for Ethereum projects. CEO Joseph Lubin was a co-founder of Ethereum and since moved on to foster Ethereum startups.

However, ConsenSys is now re-evaluating its future. Initial reports emerged in December that ConsenSys would lay off 13% of staff. However, further rumors point to a much larger restructure involving the layoffs of 50-60% of its workforce.

In a statement, Lubin said: “Our first step in this direction has been a difficult one: we are streamlining several parts of the business including ConsenSys Solutions, spokes, and hub services, leading to a 13% reduction of mesh members.”

In its bid to fund the next generation of Ethereum projects, ConsenSys reported burn rate was $100 million.

Bitmain (up to half of all staff)

Bitmain is the biggest name in cryptocurrency mining. The company has even filed an initial public offering (IPO) to list itself on the Hong Kong stock exchange.

However, crypto winter has hit Bitmain hard. It closed its research and development arm in Israel late last year. Rumors then began to circulate that half of all staff were at risk.

The rumors spread to social media network MaiMai (China’s version of LinkedIn) to which a verified Bitmain employee wrote: “It’s affirmative. The layoff will start next week and involves more than 50 percent of the entire Bitmain’s headcount.”

The layoffs are reportedly in Bitmain’s non-core departments such as artificial intelligence.

Steemit (70% of staff)

Steemit is a blockchain-based social media and blogging platform. Similar to Medium, but contributors are paid in cryptocurrency for their writing.

The platform laid off 70% of staff in 2018. Founder and CEO Ned Scott cited “the weakness of the cryptocurrency market, the fiat returns on our automated selling of STEEM diminishing, and the growing costs of running full Steem nodes” for the decision.

He also explained the need for sharp focus on the core product before expanding: “In order to ensure that we can continue to improve Steem, we need to first get costs under control to remain economically sustainable.”

Kraken (57 staff members)

Kraken is one of the oldest and largest cryptocurrency exchanges. It’s also considered one of the most secure. However, the exchange is not immune to falling prices and lower volume on its platform.

The company cut 57 staff members from its Halifax office in Canada in 2018. However, the company maintains it is still “aggressively hiring” in many areas of the business.

Huobi (exact figures not disclosed)

Another of the world’s largest cryptocurrency exchanges, Huobi, released a vague statement about “optimizing” its staff. Although exact figures have not been disclosed, this is widely assumed to mean broad layoffs and restructure at the company.

Coinfloor (most of its 40 employees)

London-based Coinfloor is the oldest crypto exchange in the UK. It reportedly cut most of its 40 staff members in October 2018 in response to low volume. 

CEO Obi Nwosu said “We are currently working on a business restructure to ensure that we focus on our competitive advantages in the marketplace… As part of this restructure, we are making some staff changes and redundancies.”

Spankchain (more than 50% staff)

Spankchain ran a successful ICO, launching a coin to fund an adult entertainment platform. But when the coin’s market cap dropped from $190 million to just $6 million, the company was forced to rethink. It cut its employee and freelancer base from 20 to 8. 

Blockfolio

Blockfolio, a crypto portfolio tracker, has cut staff from 41 to 37 in an effort to restructure the company. Despite a recent $11.5 million injection of funding, Blockfolio has refocused its operations, putting an affiliated venture called Datablock on the backburner.

340 UK Blockchain Companies Shut Their Doors

Sky News in the UK scoured the Companies House and Open Corporates database and discovered that 340 blockchain or cryptocurrency companies in the UK closed down in 2018.

The harsh market conditions are forcing companies in the space to rethink their strategies, refocus, and concentrate on their core business. Let’s hope we see fewer headlines like this in 2019.

Ethereum scaling roadmap casper, plasma, sharding

A version of this article appeared in our exclusive newsletter. If you’d like Block Explorer’s cutting-edge analysis in your inbox every Tuesday, sign up now.

While the Ethereum roadmap isn’t definitively laid out, there are many important updates planned to take place in 2019. We can also expect to see more of the research that has taken place over the past two to three years begin to enter preliminary testing phases and eventual implementation on mainnet. Without further ado, here’s what you should know about Ethereum’s development efforts in 2019 and beyond.

How Will Ethereum Scale?

Ethereum has already accomplished a lot as a blockchain protocol since its initial project development began in 2014. With thousands of decentralized applications (dApps) built on top of Ethereum, it’s the clear leader of ecosystem creation amongst blockchain projects. However, a number of newer blockchain projects are beginning to challenge this. EOS, POA, and Steem are all excellent examples of blockchains that also have a number of native applications.

In early 2019, there are a number of challenges that remain unresolved for Ethereum. The primary focal point of Ethereum in the immediate future is clearly on improving Ethereum’s scalability. 

Ethereum transactions scaling
When Ethereum transactions increase, the network slows down and fees increase. A scaling solution is needed.

Making an exact timeline for when we should expect to see these solutions implemented can be difficult. Nonetheless, it’s good to use estimated time frames based on various sources to show how close (or distant) Ethereum’s upgrades are.

The Ethereum Roadmap at a Glance

UpgradeDateDetails
Raiden Red EyesDecember 2018Off-chain solution for faster and cheaper transactions.
Constantinople hard forkJanuary 16th, 2019Lays the technical groundwork for significant scaling projects in the future.
PlasmaTBDThe introduction of “child” chains off the main Ethereum blockchain for faster and cheaper transactions. Similar to how the Lightning Network works on Bitcoin.
Caspermid-2019Ethereum’s main scaling goal. Casper is the shift from Proof-of-Work to the more efficient Proof-of-Stake.
Sharding2020-2021Partition the existing blockchain into smaller pieces known as shards.
Serenity (aka Ethereum 2.0)2019-2021The culmination of Casper and Sharding will create “Ethereum 2.0.”
Ethereum 3.02022-2025Implementation of a ‘super quadratic sharding’ solution which could facilitate one billion transactions per day.

Before we look at the roadmap in more detail, let’s also give some context to where the project is today.

Ethereum 1.0 (July 30, 2015 to Present)

Classifying the various Ethereum versions can be tricky. This is because the project isn’t the same as it was during its mainnet launch in July 2015. Plus, there are two commonly-accepted classifications. 

First, you’ll find that the Ethereum blockchain in early 2019 is still referred to as ‘Ethereum 1.0’. Ethereum 2.0 is referred to as Serenity. The official Ethereum Wiki page shows that Serenity is technically classified as Ethereum v4, and its release date is to be determined. 

Some major development milestones of Ethereum 1.0 include:

Olympic (v0, released in May 2015)

Frontier (v1, released in July 2015)

Homestead (v2, released in March 2016)

Metropolis (v3 aka vByzantium released in October 2017). 

Metropolis (v3.5 aka vConstantinople) will be released in January 2019. 

Raiden’s Red Eyes Launched on Ethereum Mainnet (December 21, 2018)

Although this technically happened in 2018, it’s still an important and recent achievement on the roadmap to reaching greater scalability for Ethereum. In sum, the Red Eyes protocol allows for quicker transaction completion times through payment channel technology, which takes place off-chain. 

Some innovative features of Red Eyes include single and multi-hop transfers, REST API with endpoints for all functionalities, rewritten and more gas-efficient smart contracts (e.g. only one contract per token network), recoverability in case of an irregular shutdown of the Raiden node, and the integration of the Matrix transport protocol for messaging. 

raiden network
The Raiden network

Still, the current version of Red Eyes has a few known issues to be aware of. For example, third parties are currently unable to monitor channels on behalf of nodes or to pathfinding services. It also isn’t possible to do atomic swaps or upgrade smart contracts with Red Eyes. 

The only way to upgrade the network is to close all channels and redeploy a new smart contract and reopen the channels. Additionally, Raiden’s blog post mentions numerous security notes. Some known issues include a compromised user system, a full disk, blockchain congestion, and chain reorganizations. 

Once fully deployed, Raiden is designed to enable the Ethereum blockchain to process one million transactions per second and make transactions significantly cheaper to complete than before. 

Three 1,000 ETH Grants (December 2018)

In December 2018, Vitalik Buterin sent 1,000 ETH grants to three different blockchain companies: Prysmatic Labs, Sigma Prime, and ChainSafe Systems. Even though this was positive news, it actually led to mixed reactions from members of the blockchain community. 

For example, one VC investor stated that Ethereum is “missing ship dates [and] are lacking basic operational leadership.” A CEO of a crypto project said, “Ethereum has taken its lead for granted for too long (2 years). Needs increased focus and urgency on scalability to reclaim its narrative. Move fast or die slow.”

Whether or not you agree with these criticisms, it’s safe to say that most of Ethereum’s innovations are still listed on the future roadmap, and a lot of work is needed to sustain its position as a leader in blockchain and crypto. With that being said, here are some future events to look forward to.

Metropolis, vConstantinople (January 16, 2019)

Constantinople is the first major Ethereum update of 2019 and quite possibly the most important since the October 2017 update. Constantinople marks a hard fork of the Ethereum blockchain. After this update is released, members of the community will have to decide whether to run the old network or switch to the new one. 

Lane Rettig, an independent developer, has called Constantinople a “maintenance and optimization upgrade.” While these changes aren’t all that big from an end user’s perspective, they do present new opportunities as well as challenges overall in several key areas. For example, upgrades implemented with Constantinople should make it easier for the Ethereum team and projects building on top of Ethereum to continue on tackling scalability issues in the future.

Constantinople will include the following five EIPs (Ethereum improvement proposals): 

EIP 145 introduces a more efficient method of information processing known as Bitwise shifting. According to the EIP145 proposal notes, it costs around 35 gas to do a shift using arithmetic. However, this solution introduces an Ethereum Virtual Machine (EVM) native operation that only costs 3 gas. This results in a 91.4% savings in gas costs. 

EIP 1052 provides a solution for optimizing large-scale code execution on Ethereum. More specifically, this functionality returns the keccak256 hash of a contract’s bytecode. It improves upon the design of the EXTCODECOPY opcode. As a result, large contracts that only require the hash will be cheaper to process.

EIP 1283 is based on EIP 1087. This proposal aims to help smart contract developers by reducing gas costs related to changes made to data storage.

EIP 1014 is utilized in state-channel use cases that involve counterfactual interactions with contracts. It allows interactions to (actually or counterfactually in channels) be made with addresses that do not exist yet on-chain.

EIP 1234 is the somewhat controversial proposal that reduces the block mining reward issuance from 3 ETH down to 2 ETH. This will change Ethereum’s underlying economic policy.  It also delays the introduction of the “difficulty bomb” for 12 additional months. The difficulty bomb is a piece of code which will eventually increase the difficulty level of puzzles in the mining algorithm used to reward miners with ETH.

Plasma and Plasma Cash (TBD)

Even though it’s up for debate, most consider Plasma to be an on-chain scaling solution. This is due to the fact that Plasma relies upon the inherent security of the Ethereum blockchain. 

Plasma chains have the ability to be better than ordinary sidechains due to increased security and easier accessibility. For example, if a Plasma sidechain breaks, funds are still secure thanks to the main chain. Meanwhile, users can also withdraw funds from a Plasma sidechain to the main chain at any time with balances from the last valid block. 

Ethereum plasma diagram

Back in September 2018, OmiseGo Director of Engineering Kasima Tharnpipitchai outlined updates about providing a Plasma solution for Ethereum at a meetup event in Warsaw. On October 8, 2018, the OmiseGo team released the fifth Plasma update. Although Plasma hasn’t been added on top of the Ethereum mainnet, there has been a lot of progress towards this goal. For example, the Plasma team arrived at Devcon4 with an internal testnet, a Plasma MVP, and the first dapp built on OmiseGO. 

Plasma Cash is another solution that’s supposed to be even more efficient than Plasma. However, this is still in the research phase as of the beginning of 2019. The OMG team has been working with other researchers to simplify an atomic swap protocol which utilizes Vitalik Buterin’s atomic swaps and defragmentation work. 

Loom Network is another blockchain project that has been working on developing similar Plasma solutions to improve the scalability of the Ethereum blockchain.

Casper (mid-2019)

Casper is Ethereum’s pure Proof of Stake consensus algorithm. Why the change to Casper? Simply put, Proof of Stake blockchains are typically more scalable than Proof of Work blockchains. Additionally, there are growing concerns over the environmental impact of cryptocurrency mining operations. 

As of the beginning of 2019, transactions on the Ethereum blockchain are still reliant upon Proof of Work. This means that cryptocurrency miners play a big role in verifying the accuracy of transactions. When Ethereum switches to Casper, transactions will be validated with staking. 

Originally, the core development team decided to come up with two phases of Casper (FFG and CBC). FFG was supposed to be a hybrid PoW/PoS solution. Meanwhile, Casper CBC was designed to be a pure PoS. In 2018, however, the Ethereum team scrapped this two-phase Casper approach and decided to focus solely on Casper CBC. Here is an excellent article (with diagrams) that demonstrates how Casper CBC should work.

proof of stake vs proof of work
Source: Block Geeks

Sharding Updates (2020 and 2021)

In basic terms, sharding aims to securely partition the existing blockchain into smaller pieces known as shards. This solution, like most others on this list, is something that many non-Ethereum blockchain developers and researchers are also working on. 

When it comes to implementing sharding on a mainnet, Ethereum won’t be the first. This title will likely go to Zilliqa upon the release of its mainnet on January 31, 2019. However, Ethereum’s sharding implementation isn’t too far down the road. According to various estimations from developers, we should expect the Ethereum blockchain to implement phase one of sharding sometime in 2020 and phase two sometime in 2021. 

Serenity a.k.a. Ethereum 2.0 (2019/2020)

Earlier, we mentioned that Ethereum is still in version 1.0 as of the beginning of 2019. So when will Ethereum 2.0 be released? This is still difficult to say exactly. That’s because Ethereum 2.0 is generally considered to be a combination of Casper CBC (full PoS) and sharding. As stated above, Casper will likely be ready mid-2019. 

Meanwhile, sharding for Ethereum won’t be initially implemented until 2020. In that sense, it’s easier to think of the move to Ethereum 2.0 as the culmination of two separate upgrades and not something that will have a single release date.

Ethereum 3.0 (2022 to 2025)

While Serenity (Ethereum 2.0) is still on the horizon, the core Ethereum team is already working towards Ethereum 3.0. This mostly involves research, rather than implementation. As to be expected, objectives that are further along in the roadmap have broader time frame ranges. 

This is because delays or even circumstances that speed up the current projects or the future development of Ethereum 3.0 could take place.

Super quadratic sharding is a major part of Ethereum 3.0. As this site explains it, “So say, Ethereum currently has 16,000 nodes and all of them are currently processing the same transactions. You split that into 160 node groups of 1,000 nodes each. Ethereum’s current capacity is around one million transactions, so in this sharded chain its capacity would be one million x 160.”

Once everyone is confident in the capabilities of the sharded chain, it’s possible that, sometime between 2022 to 2025, Ethereum can split those 1,000 nodes each into 10 groups of 100 nodes each. This would make it possible to process one billion transactions per day with Ethereum. 

Conclusion

Ethereum continues to make progress on its roadmap goals for 2019 and beyond. Much like any project, there will likely be a few speed bumps along the way. However, a large group of core developers and an ecosystem of independent developers and projects building infrastructure for Ethereum is what continues to accelerate innovation.

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bitcoin genesis block

Bitcoin is officially ten years old. On this day ten years ago, Bitcoin’s elusive creator Satoshi Nakamoto mined the first Bitcoin block. Known as the “genesis block” or Block#0, it marks the very start of the Bitcoin blockchain.

A decade later, there are now more than half a million blocks on the Bitcoin blockchain. And the price of one bitcoin has soared from almost zero to $3,900.

Genesis Block

The very first block was mined by Satoshi on January 3rd, 2009. You can actually see it here on our Block Explorer.

The block contains just one transaction: the 50 BTC reward for mining it. 

The block also contains a pointed message about the existing banking system with a message written into the code:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

The message refers to the headline in The Times newspaper on that day. You could argue it’s a simple time stamp. However, it’s more likely a comment on the failing banking system. British Chancellor Alistair Darling was considering a bailout for the banks after the financial crisis in 2008.

It’s no coincidence that Satoshi included this message as he ushered in a radical new monetary system of his own.

Satoshi was rewarded with 50 bitcoins for mining the first block. However, due to the way the bitcoin blockchain is coded, the reward for the first block cannot be spent. Over time, people have donated additional BTC to the block.

Even today, the Genesis block received a gift from the following address:

1HappyTenthBirthdayBitcoinxvYeM9e

“Thanks Satoshi”

To celebrate the anniversary, crypto exchange BitMex took out an advert on the front page of The Times. It reads: “Thanks Satoshi. We owe you one. Happy 10th Birthday, Bitcoin.”

It’s a subtle nod to Satoshi’s hidden message on the genesis block which referenced The Times newspaper headline.

Happy birthday, Bitcoin!

Further reading: 24 Clues About Satoshi Nakamoto’s Identity (Bitcoin’s Mysterious Creator)