How was Istanbul hard fork on the Ethereum network. When will Ethereum 2.0. Ethereum mining using the Proof-of-Stake algorithm. Short-term and long-term Ethereum price prediction.
The Ethereum developers have postponed the Constantinople update to the next year, although earlier on they planned to finish it in December. The decision was made due to an error while the update was...tested in the test network. Let us review what is to happen with Ethereum given that Vitalik Buterin wants to remove the traditional mining from the cryptocurrency.
6 years ago
Ethereum Overview
Despite the fact that the launch of the bitcoin industry that happened 10 years ago was the starting impetus for the blockchain industry, the real revolution in this area started to be administered much later. This was July 30, 2015 – the day when Ethereum was launched, which is rightly called the next generation blockchain and even Bitcoin 2.0.
Ethereum – а transactional blockchain platform for deploying dApps based on smart contracts, implemented as a single distributed virtual machine EVM (Ethereum Virtual Machine), the functioning of which is ensured by the rules of cryptography.
To exchange values within the network, as well as for the creation and operation of “smart” contracts, the coin with the same name is used (abbreviated ETH), currently taking 2nd place in the ranking of cryptocurrency capitalization.
Like all classic blockchains, the Ethereum network is a sequential chain of blocks with the recorded transactions without the possibility of making changes. One of the main features of this system is subordination of all operations to the PoW consensus algorithm (Proof-of-Work). Updating data on a system with these rules occurs by performing complex mathematical calculations by the nodes in order to find the hash of the new block and receive rewards in the form of ETH coins.
Ethereum transactions are signed packages, which contain information about sending coins and service messages between the accounts which are involved in the transaction. The last are characterized by the availability of a unique identifier (address) and there are two types of it:
External – are used to store and send coins belonging to members of the coin network and controlled using private keys.
Smart contract accounts are objects with program code which launches any operations on the network in case of fulfillment of the conditions specified in it.
Depending on the type of account of the final recipient, the purpose of the transaction can be either a regular transfer of a certain amount of ETH, or the activation of the program recorded in the “smart” contract.
A kind of fuel for carrying out absolutely all types of operations in the Ethereum blockchain is gas – сonditional unit for evaluating the computing power spent on transaction confirmation. The amount of commission that miners receive for their work depends on the quantity and price of gas.
All transactions carry typical informational content – block number, inclusion date, hash, sender and recipient addresses, amount transferred, price and gas limit, commission fees, digital signature and optional message.
Hard Forks Ethereum
Over a 4-year history of existence, Ethereum has been subjected to “hard forks” 6 times with the introduction of fundamental changes to the blockchain. In most cases, updates were planned in advance, but there were also forced ones.
The initial version of Ethereum was codenamed Frontier and it was distinguished by problems with stability and a complex way of organizing work with the network (via the command line). But even then, the first mining tools and creating decentralized applications were available.
The first Ethereum hard fork called Homestead took place on March 14, 2016. Network stability has been enhanced, the amount of payment for creating smart contracts has changed, and also the first graphical interface for interacting with the network appeared – the Mist wallet.
Then in June of that year, hackers withdrew $ 50 million in ETH equivalent from the accounts of the DAO platform, which functioned on ether smart contracts. A month later, the Ethereum network was kickbacked by a hard fork to the previous hacking state. Part of the community refused to accept the update and continued its way into the old chain, now known as Ethereum Classic.
In the fall of 2016, the work of the Ethereum blockchain was significantly slowed down due to several DoS attacks. The developers had to hold two more unplanned hard forks (EIP-150 и Spurious Dragon) to improve network resilience and addressing the duplication vulnerability.
The next two hard forks were separate parts of the major Metropolis update, aimed at preparing the network for the transition to PoS mining (proof of ownership) and solving scalability problems.
The first stage called Byzantium was implemented on October 16, 2017. It was about improving the speed and safety of the blockchain, and also solved the problem of the impending “complexity bomb” by transposition the activation period forward 18 months. At the same time, the time for generating new blocks was halved (from 30 to 15 seconds), and the reward for miners decreased from 5 to 3 ETH.
Latest Ethereum Hard fork Constantinople was activated on the verge of winter-spring 2019 - on the night of February 28 to March 1. The result was code optimization for smart contracts and improving the productivity of EVM (Ethereum Virtual Machine). The “complexity bomb” was also carried over again (this time for a year) and the reward for block mining was reduced by one and a half times - from 3 to 2 ETH
Vitalik Buterin
Vitaly Buterin (born January 31, 1994 in Kolomna, Russian Federation) is a Canadian IT specialist with Russian origin. From 6 to 20 years old he lived in Canada, where he received his secondary education and entered the University of Waterloo, which he eventually abandoned, preferring to work with blockchain technologies.
He is the author of the concept of Ethereum, which is named Bitcoin 2.0 and proposed back in late 2013, being at that time the editor-in-chief and co-founder of the printed publication Bitcoin Magazine.
Having received the New York World Technology Award for this idea and a $ 100K grant from Thiel Fellowship, Vitalik Buterin, with a number of like-minded people, started work on the Ethereum blockchain, the result was the launch of the main network of the project at the end of July 2015.
In the same year, Buterin became one of the founders and CEO of the Fenbushi Capital venture capital fund, which received $ 50 million financing from the Chinese company Wanxiang Group and specialized in investing exclusively in blockchain projects.
In 2017, he moved to Singapore. Before that, he lived for 3 years in the Swiss city of Zug, which is known under the informal name “Crypto Valley”.
In Singapore, Vitalik continued to work on developments to improve Ethereum. To allocate more time for this, at the beginning of 2018, he leaves the post of CEO of Fenbushi Capital (remained as an adviser). In November of that year he receives an honorary doctorate from the University of Basel.
Buterin is in the TOP 10 ranking of the most influential people under 40, compiled in August 2017 by Fortune magazine. He also takes 5th place in the list of young successful people “30 under 30” in Forbes (2018). According to the same magazine as of February 2018 Vitalik's capital was $ 400-500 million, which allowed him to take 17th place in the ranking of the richest personalities of the cryptocurrency industry.
Buterin calls the main purpose of Ethereum complementing the limited features of bitcoin, drawing analogies with a multifunctional smartphone and a highly specialized calculator. We are talking about “smart” contracts, with the help of which blockchain functionality is expanding.
“The concept of smart contracts is so complex that is possible only with experience to understand how to make them safe… As airplanes and cars gradually become safer, as we will eventually be able to understand how to establish smart contracts acceptable level of risk”
Vitalik Buterin in an interview at Forbes magazine, commenting on the hacks of the DAO and Parity projects, which are often attributed to the failures of Ethereum.
Ethereum Rate
The first deals with Ethereum, on the basis of which it was possible to talk about establishing a rate, held on the Kraken exchange a week after the launch of the network (08.07.2015). The price for 1 ETH at that time was $ 2.8. Then the rate sharply fell to $ 0.7 and by the end of the year it consolidated in the range of $ 0.4–1.2.
2016 was the year of the first price records and “strength tests” for Ethereum. In mid-March, on the eve of the Homestead hard fork, the cost of ether rises to $ 15. The next high is the $ 21.5 mark reached on June 15 amid the success of the DAO project, working on Ethereum smart contracts. However, due to the hacking of the same platform and the theft of ether by $ 50 million, the rate decreases to the level of $ 11.
One month after this, developers conduct a hard fork with a kickback of the network to the state before the attack, as a result, the Ethereum Classic project branches off. Against this background, restored to the $ 15 rate fell to $ 8 to the beginning of August. In September, after a DoS attack on the Ethereum network, the rate starts a downward movement several months long, which ends at around $ 6.
During the first months of 2017, the value of Ethereum rises – at first slowly, then more rapidly. This is contribute the general popularization of Ethereum, new listings on exchanges, as well as an increase in the number of ICOs and dApps based on its smart contracts. The result is reaching the $ 400 mark in early June.
Until the end of autumn, the ether rate is consolidating in the range of $ 200-400, and then goes up according to the general bullish mood of the cryptocurrency market. Explosive growth is accompanied by rare kickbacks and continues until January 11, 2018, when the current maximum price of $ 1,400 was reached, after which there are several sharp fluctuation ($ 800–1300–600) and a one-year downtrend begins.
The only period of local growth in 2018 was in April – at that time, for a month, Ethereum rose in price from $ 400 to 800. For the rest of the time, the rate continues to fall and its minimum is the level of $ 80, reached in mid-December. Thus, in less than a year, the cost of ether fell in 17.5 times from its current ATH.
In 2019, Ethereum began to rise slowly. In early May, when the growth of bitcoin made everyone think in the long-awaited market reversal, the cost of ether began to increase more rapidly and by the end of June reached $ 360.
The last three months there has been a correction of increase which has led Ethereum to the level of $ 160. Further movements, most likely, will entirely depend on the market sentiment set by its leader, bitcoin.
For convenient conversion of the Ethereum rate into the currencies used in everyday life, as well as other cryptocurrencies you can use a variety of online calculators and converters. For example, CalcProfi, reference portal Calculator, Myfin.by and similar services.
Ethereum Wallet
Depending on your preferences, Ethereum holders can use quite a lot of solutions to create wallets that differ in the way they are implemented and the level of security:
Mist is the first official ETH coin storage application with a graphical interface. Launched in the spring of 2016. It is the only desktop "thick" wallet for Ethereum, that is, after its installation, there is a complete synchronization with the blockchain (this requires at least 1 TB of hard disk space). It is considered the safest wallet for Ethereum, but not the most convenient to use;
MyEtherWallet (MEW) is a popular online wallet for ether with a convenient and understandable interface. Creating a new ETH account via it can be fulfilled by generating a keystore file or mnemonic phrase. The variant using the MEWconnect mobile application is also available.
MetaMask is a web wallet for Ethereum made in the form of a browser extension. After installation, MetaMask suggests already importing an existing wallet using a seed phrase or generating a new one. After that, the functions of receiving / sending ether and interactions with dApps embedded in visited sites;
Multicurrency wallets - desktop and mobile applications with support for two or more cryptocurrencies. The ability to create an Ethereum wallet and operate it is present in many aps.The most reliable desktop wallets are Atomic Wallet, Jaxx and mobile Coinomi and Coinbase Wallet;
Hardware wallets - offer the possibility of “cold” storage (offline). Most often, they support several coins at once. Ethereum can be stored in almost all models of hardware wallets Ledger Nano, Trezor, KeepKey and other producers;
Paper wallets - are a piece of paper, on which the public and private keys from the Ethereum accounts are printed or manually recorded. They can be created independently or via the corresponding function, present in some wallets like MyEtherWallet.
Ethereum Earning
The list of available ways to make money today with the help of Ethereum is quite wide. However, only a few of them give an opportunity to make a decent profit.
Mining
One of the most popular earning variants is Ethereum mining by receiving rewards for finding the hash of the new block (2 ETH at the moment). To do this, you need at least one powerful video card as part of a PC with installed Ethminer, Parity, Geth software and etc. The income obtained in this way will not be very large, but it is quite suitable for introducing beginners to this industry.
Ethereum mining with rigs (farms) will be more profitable, consisting of 4-10 or more video cards. Asics can be even more profitable, supporting the mining of coins on the Ethash hashing algorithm, like Bitmain Antminer E3 or Innosilicon A10.
Herewith the earning level is dependent a lot on changes in the complexity of mining and the Ethereum rate. In addition, an initial infusion of funds into the purchase of equipment is required.
To select an ETH mining device and make sure of the profitability of its use at the current rate and energy costs, the most convenient to use special online calculators from various services. For example, CryptoCompare or CoinGecko.
Trading and investing
Equally popular is the earnings on the difference in the rate of Ethereum in different periods of time. It can be based both on long-term deals, included in the investment category, as well as medium / short-term, which implies trading on intended sites.
As a rule, in the first case, the ether can be purchased in any available way (exchangers, p2p platforms, etc.), held on a personal wallet for a long time until a significant increase in the rate and then sold.
If we are talking about the Ethereum trading on the cryptocurrency exchange (regular or marginal), you can earn on short-term transactions with small rate fluctuations. In any case, you need start-up capital.
Cranes
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The only variant to earn Ethereum without initial investment – sites of cryptocurrency cranes, which charge ether for visits, button clicks and viewing ads.
A significant drawback of this method is the negligible amount of charges, usually not exceeding 0.0000003 ETH per action.
Ethereum News in 2020 and Development Prospects
The most important event for the Ethereum network over the past months of 2019 was the Constantinople hard fork. Its successful activation was the completion of Metropolis’s two-step upgrade, which has almost completed the preparation of the ether blockchain for the transition to PoS mining and implementing scalability solutions, known as Serenity.
It is expected that in mid-October, another hard fork called Istanbul will be implemented, after which there will be support of the new mining algorithm ProgPoW (progressive Proof-of-Work), increasing the efficiency of ether production on video cards. It will also improve protection against transaction duplication and increase the compatibility of Ethereum and Zcash networks.
In the Ropsten test network, this hard fork is already activated, but the results (division into two chains) hint that its main launch will be postponed. If everything goes according to plan, then in early January of next year, Ethereum can be transferred to PoS.
