The cryptocurrency industry’s nascent recovery suffered a setback on Tuesday as Ethereum (ETH) announced a delay to their much-anticipated upgrade. The ‘Constantinople’ hard fork will no longer be occurring in the near future, as the Ethereum developers have identified a potential security concern. The news shook the price of ETH as nervous investors reacted to another delay. The roadmap for the ‘Metropolis’ phase of Ethereum development ends with Constantinople – an important step in the awaited transition to a proof-of-stake algorithm. The hard fork was originally planned for November, before a technical issue caused the test-net to cease functioning.
While the Ethereum development team should be lauded for their thoroughness, the inherent volatility of the cryptocurrency market responds poorly to bad news. The price of ETH dropped 10% in the immediate aftermath of the announcement – although it has since recovered considerably. The switch to Proof-of-Stake is a contentious decision, and each hiccup along the path seems to make the Ethereum community nervous.
Constantinople and the Non-Contentious Hard Fork
Although it is often described as a hard fork, Constantinople exists solely as an upgrade for the primary Ethereum blockchain. This type of upgrade is referred to as a ‘non-contentious hard fork’, wherein the old chain is abandoned and all users switch naturally to the new fork. While it does not directly introduce the Proof-of-Stake algorithm, it helps to set the stage for the eventual arrival. Alongside several optimization changes, the upgrade optimizes systems to reduce gas expenditures – as well as facilitating easier off-chain solutions.
The final, major change is a reduction in block rewards from 3 ETH to 2. To offset this, the difficulty of mining each individual block has been reduced. This is a stop-gap measure to help offset the ‘difficulty bomb’ programmed into the blockchain. This difficulty bomb will eventually make mining Ethereum unfeasible – incentive to complete the Proof-of-Stake transition.
Implications of the Delay
In the short-term, Ethereum may suffer from some price stagnation. The average investor’s confidence in the blockchain took a hit in response to the sudden news. As always, the price will ultimately be at the mercy of the market itself – but some investors may wait for concrete information before reentering the Ethereum trade.
Longer term, the delay is a sign of continued dedication to a stable, secure blockchain. Vitalik Buterin and his development team are ensuring that the Constantinople hard fork does not introduce critical security issues to the chain. Given the frequent exchange wallet hacks and incessant scheming by malicious actors, a focus on security is of the utmost importance to any high profile blockchain.
Article By: Adam Stone