Ethereum Constantinople

Ethereum Constantinople is a hard fork of the Ethereum blockchain designed to lay the groundwork for huge scaling improvements.

Originally scheduled for Wednesday 16th January, Ethereum Constantinople has been delayed by developers. A vulnerability was found in the code that could have been exploited by hackers, putting funds at risk.

In a blog on Ethereum.org, the team explained: “Out of an abundance of caution, key stakeholders around the Ethereum community have determined that the best course of action will be to delay the planned Constantinople fork.”

The delay is temporary while developers work towards a solution.

What is Ethereum Constantinople?

The hard fork is part of Ethereum’s long-term scaling road map. Ethereum has long suffered congestion problems which results in high fees and slow transaction times when the network is busy.

The Ethereum team is working on several scaling projects including off-chain solutions, sharding, and, ultimately, a switch to “Proof of Stake” algorithm. Together, these changes should result in significantly higher speeds and lower costs.

However, upgrading the network while operational is like changing the engine in a moving car. The Ethereum team need to lay the technical groundwork before the big changes can happen.

That’s where Ethereum Constantinople comes in. It implements a series of maintenance upgrades that facilitate enormous scaling in the future.

What’s in the upgrade?

Ethereum Constantinople 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.

Of the proposals above, only the last one is considered controversial. Ethereum’s difficulty bomb is designed to make it progressively more difficult to mine Ethereum. At a certain point, it will become almost impossible, forcing the switch from “proof of work” to “proof of stake.”

The proposal exists to de-incentivize miners by not only making it more difficult to mine but by reducing the reward too.

Despite the controversial proposal, mining pools were generally on board with the upgrade. We were not expecting a contentious fork or competing chains.

Ethereum Constantinople Delayed

On Tuesday 15th January, Ethereum developers announced a delay to the upgrade. The decision involved Ethereum founder Vitalik Buterin and other prominent Ethereum developers.

A new date for the upgrade will be discussed on Friday 18th January. 

A Critical Vulnerability Discovered

A vulnerability was discovered in one of the proposals (EIP 1283) by ChainSecurity, a smart contract auditing company. 

The vulnerability would have enabled a “reentrancy attack” against smart contracts similar to the 2016 DAO hack which saw $70 million in ethereum stolen.  

A reentrancy attack means a manipulative actor could theoretically ask the smart contract to perform a specific function multiple times before the contract is executed or anyone is notified. It means an attacker could keep withdrawing money almost endlessly. 

In a detailed Medium post, Chain Security explains:

“The upcoming Constantinople Upgrade for the ethereum network introduces cheaper gas cost for certain SSTORE operations. As an unwanted side effect, this enables reentrancy attacks when using address.transfer(…) or address.send(…) in Solidity smart contracts. Previously these functions were considered reentrancy-safe, which they aren’t any longer.”

Is Ethereum at risk now?

ChainSecurity concluded that the current Ethereum blockchain is currently at risk:

“A scan of the main ethereum blockchain using the data available from eveem.org did not uncover vulnerable smart contracts.”

At the time of writing, the Ethereum Constantinople upgrade is delayed with a new launch date to be discussed on January 18th.

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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)

zilliqa blockchain gaming

I believe gaming will be one of the first major breakthroughs of blockchain technology. We already saw the first hints of a breakout when Cryptokitties took the blockchain world by storm in late 2017. So much so that it nearly brought down the Ethereum blockchain.

The ability to own and trade one-of-a-kind digital items makes blockchain gaming a truly unique proposition. Couple that with virtual reality worlds and secure blockchain technology; it’s a revolution waiting to happen.

But there’s a problem. No blockchain platform is yet powerful enough to support high-quality games and millions of users.

Ethereum is the obvious candidate, but as we saw with Cryptokitties, there are serious issues with scaling. Ethereum ground to a halt when too many users flooded the system. The Ethereum scaling roadmap now extends to 2025 to address these issues.

So what else is out there? Zilliqa.

Zilliqa has the potential to scale significantly faster than Ethereum, and the team is putting gaming at the heart of their mission. I spoke to Xinshu Dong, CEO and co-founder of Zilliqa to find out more. First things first:

What is Zilliqa?

Zilliqa is a blockchain platform similar in focus to Ethereum. It gives developers a platform to build games, decentralized apps (dApps), and projects. The key difference to Ethereum is speed and throughput. Zilliiqa can handle 2,828 transactions per second compared to Ethereum’s 15-30.

xinshu dong zilliqaIn Xinshu’s words, “Zilliqa is an open, high-performance, high-security blockchain platform. We aim to make decentralized blockchains the building block of future applications while tackling the limitations in scalability and security in order to enable real-world usability across a variety of industries.”

Why has progress been slow in blockchain gaming?

There are a handful of innovative blockchain games out there right now. But we’re a long way from seeing anything as ambitious as Fortnite or League of Legends on a blockchain. The main reasons for this, Xinshu explains, is “poor user experience (UX) and a lack of concrete user value-add.”

The issue is also rooted in a lack of technology on which to build blockchain games. “It is difficult for developers to fully address this without a stronger tech stack to enable a better user experience.”

Zilliqa aims to fix these issues by establishing a platform that is friendly for gamers to use and powerful enough for developers to build ambitious games upon.

Zilliqa blockchain gaming

Improving blockchain gaming UX

The problem for gamers starts with a complicated on-ramp. To play blockchain games, you often need to download a browser extension and load up a wallet with the correct cryptocurrency.

“Gamers are confronted with high barriers to entry,” Xinshu says, “due to a complex setup process, such as getting a wallet and an upfront cost to pay for gas fees. This becomes a deterrent for new gamers in the space.”

The games themselves are often slow and cumbersome due to the low transaction rates on Ethereum. 

“Blockchain games are slow and the lack of immediate finality results in users waiting for their transactions to finalize, which can often take a few minutes. When compared to mobile, PC, or console games, this is a poor gaming experience. Zilliqa’s higher transaction throughput and lower gas fee can help to address some of these issues. We’re also exploring features that can help developers design more user-friendly games, such as the ability to offset gas fees to developers rather than to users.”

Blockchain Games Leave Ethereum For Zilliqa

Zilliqa made headlines in the crypto world last year for luring the popular game Etheremon away from its home on Ethereum. I ask Xinshu why Zilliqa is a better fit.

Etheremon zilliqa

Etheremon, a decentralized app built on the Ethereum network, experienced high gas fees and transaction congestion due to scalability issues. This led to poor UX for users and Etheremon was forced to move the in-game battles off the blockchain, demonstrating the structural limitations of existing infrastructure and the need for alternative, innovative solutions.”

Zilliqa’s faster platform provides an instant UX boost for gamers and developers. However, speed, UX, and decentralization is just the first step. For blockchain games to truly take off, Xinshu admits, we need a killer game.

“Games Need to be Fun”

“While some gamers may be attracted to the decentralized manner of buying and selling items within the game, ultimately, the game needs to be fun to attract gamers. If the game is not in high demand, to begin with, the items themselves will have little value.

“As a whole, blockchain gaming needs to be designed from the ground-up to maximize the value-add of blockchain as opposed to copying existing mobile gaming paradigms. Zilliqa is actively looking to partner with game developers who are committed to this, and we strive to provide technical solutions to support them.”

Could Virtual Reality Be The Answer?

One of Zilliqa’s partners in the gaming world is Decentraland; a virtual reality platform that supports games and even virtual real estate. Xinshu tells me more about the potential of virtual reality’s interplay with blockchain.

Decentraland-Review-The-Blockchain-Virtual-World
Decentraland: a vast virtual reality world on the blockchain

“VR is one of the areas of gaming that has strong synergies with blockchain. In games where users can create their own items, artwork, and worlds, giving them ownership through the blockchain makes a lot of sense –– for example, Cubego, the new game by the Etheremon team, emphasizes user generated content. 

“When looking at the entirety of the virtual world on a blockchain, there’s an immutable record of ownership when a user creates these items and eventually, creations can be traded and monetized safely. Although it’s possible to do all of this in a centralized manner, the decentralized nature of building a virtual world on blockchain can breed a stronger sense of community and ownership across the members of that world.”

Let’s get technical…

So far, we’ve addressed Zilliqa’s commitment to the gaming industry. But how does the technology work behind the scenes?

“Zilliqa uses sharding to attain greater scalability while maintaining high standards of security. Our entire mining network is divided into multiple consensus groups – shards – that are capable of processing transactions in parallel. Our network also allows for on-chain linear scalability – this means that as the network grows and the number of nodes increases, the faster our network runs. Though we are able to attain a higher transaction throughput, this does not occur at the expense of the number of nodes available to process transactions.”

Zilliqa sharding
Zilliqa is one of the first to implement experimental sharding technology to achieve huge throughput

Sharding: Zilliqa’s silver bullet for scaling

Zilliqa’s technical solution to high speeds and lower fees is sharding. Sharding is also being explored by Ethereum’s development team, but Zilliqa will likely be the first blockchain to implement the technology.

In simple terms, sharding partitions the blockchain into smaller “shards” in a bid to relieve congestion. It’s one of many proposed solutions for scaling blockchains. But why did Zilliqa put sharding at the heart of its technology?

“We’ve found that sharding is a viable layer 1 solution that allows us to strike a balance between decentralization, security, and scalability. Security is a priority for us and preserving decentralization ensures that our blockchain is secure through the consensus of public opt-in nodes and offers third-party censorship resistance of transactions. By opting for a layer 1 scaling solution, we’re able to scale securely as the blockchain operates with the full security guarantee provided by itself. Moreover, scaling on layer 1 will allow us to explore more solutions for layer 2 scaling further down the line.

Though we believe that sharding is currently one of the best options to tackle the scalability problem, we intend to continue to innovate beyond that as we develop our platform.”

What’s next for Zilliqa?

Zilliqa’s mainnet is scheduled to go live on 31st January. A successful launch could lure even more dApps and game developers to the platform. As Xinshu explains, gaming is just one industry on the platform’s roadmap.

“In general, Zilliqa wants to enable any DApps that can bring a strong user value-add, realize the true potential of blockchain, and benefit from our high throughput platform. We also want to focus heavily on use cases, specifically in digital advertising through our partnership with Mindshare, and in financial services and insurance. 

A strong user experience with low barriers to entry coupled with a clear, concrete user value-add, will help to make DApps more popular among mainstream audiences.”

Zilliqa’s mainnet launches on 31st January.

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Ethereum scaling roadmap casper, plasma, sharding

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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 price 2018

2018 was a brutal year for the bitcoin price. Shortly after hitting an all-time high, the crypto bubble popped. Over the following twelve months, the bitcoin price slowly bled out to end the year on a low note.

Bitcoin began 2018 at $13,464 and ended the year at $3,742 – a 72% loss in value.

The total cryptocurrency market capitalization fell from $626.6 billion to $125.6 billion – an 80% drop.

Bitcoin price chart 2018
Bitcoin price chart 2018. Source: CoinMarketCap

How did bitcoin lose 72% in price?

To understand the phenomenal fall in price, we must go back to 2017 – a year of irrational exuberance and hype in the crypto space. Bitcoin became a mainstream talking point and hundreds of new cryptocurrencies emerged. “Initial coin offerings” promised easy returns.

But the mania quickly turned into anguish. As millions flooded to cryptocurrency, Bitcoin came up against severe scaling issues, hindering its adoption as a currency alternative.

And the reality of ICOs was laid bare. Most projects couldn’t possibly deliver on their wild promises. Many were nothing more than scams designed to part investors with their cash.

The subesequent 72% price crash in 2018 was the dose of reality.

Bitcoin price fall triggers layoffs across the industry

As the year progressed, blockchain and cryptocurrency firms began to announce layoffs. Many of these companies had raised money in crypto so the dramatic price falls tore away at their operating funds.

ConsenSys, a company that supports new projects on the Ethereum blockchain, announced a 50-60% staff cull. Steemit, a blogging platform powered by cryptocurrency, shed 70% of its staff.

In more high-profile layoffs, Bitmain -the world’s largest bitcoin mining company – is reportedly downsizing with up to 50% of staff members at risk. And cryptocurrency exchange Huobi is streamlining its team, although exact numbers are yet to be revealed.

This is the harsh reality of “crypto-winter.”

$1 billion crypto hacks

The discussion of cryptocurrency security reared its head again after the biggest exchange hack in history took place in January 2018. Coincheck was hacked to the tune of $532.6 million with further hacks at Bitgrail and Bithumb through the year.

The constant hacks weakened trust in the crypto exchange ecosystem and put further selling pressure on the bitcoin price.

Some progress is being made with a landmark move into crypto insurance from the Winklevoss Twins. All funds on their Gemini exchange and custody service are now fully insured.

Even traditional players are stepping into the ring as Fidelity announced a crypto custody service. Expect secure custody services, aka bitcoin banks, to develop at pace in 2019.

Bitcoin hits a regulatory brick wall

Cryptocurrency regulation continued to hinder progress throughout 2018.

The US Securities and Exchange Commission (SEC) took action against numerous ICOs. The SEC chairman concluded that “every ICO I’ve seen is a security,” which means stricter investor rules should be applied.

China maintained its ban on cryptocurrency exchanges, while South Korea authorities raided exchanges on suspicion of money laundering and tax evasion.

Most notably, the SEC rejected or pushed back at least nine bitcoin exchange-traded funds (ETFs). The inevitable launch of a bitcoin ETF is often cited as a major catalyst for the bitcoin price, but the continuous delays weighed on crypto prices throughout 2018.

Any good news for the bitcoin price?

There are plenty of potential price triggers to look forward to in 2019. The much-hyped Bakkt platform is expected in early 2019. Bakkt is a futures trading service settled in real bitcoin and is backed by ICE, the parent company of the New York Stock Exchange.

We will continue to see bitcoin ETF proposals thrown at the SEC. At least one SEC commissioner, Hester Peirce, is supportive of bitcoin and serious discussions are taking place. Expect this to dominate bitcoin conversation for the coming year.

Elsewhere, huge leaps are being made in cryptocurrency technology. The lightning network is rapidly gaining pace in a bid to facilitate micropayments for bitcoin. Blockstream’s satellites are now beaming the blockchain to every landmass on earth, eliminating the need for internet access for bitcoin transactions.

Ethereum and Ripple 2018 price roundup

Ethereum fared worse than bitcoin through 2018, falling 85%. ETH started the year at $880 and ended at $133.

Ethereum price chart 2018. Source: CoinMarketCap

Ripple XRP also fell 85%, starting the year at $2.31 and closing at $0.35.

Ripple XRP price chart 2018
Ripple XRP price chart 2018. Source: CoinMarketCap

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