Ethereum’s price has taken a back seat in the media cycle for the last few weeks. The Bitcoin hard fork – and the new coin’s subsequent 50% swings – has dominated headlines, and with Bitcoin expected to split again on November 1st, the controversy is by no means over. The phrase “hard fork” now creates a sense of unease and uncertainty; how will a chain split affect the coin price? Which coin will win and which will fail? But not all hard forks are bad. In fact, Ethereum will be hard forking in just a few weeks by releasing the hugely anticipated network upgrade, “Metropolis”. Metropolis is the 3rd of 4 major upgrades to the Ethereum network (Frontier, Homestead, Metropolis and Serenity which is pegged for late 2018). However, this hard fork isn’t contentious, and has always been part of the roadmap outlined by the Ethereum Foundation. For this reason, the likelihood of a group of individuals/businesses successfully creating a new coin (à la Ethereum Classic) by mining on the “old” Ethereum chain, is extremely small.
What to expect from Metropolis?
Metropolis is the most exciting upgrade to Ethereum yet, and moves the network another step closer to the eagerly awaited “proof of stake” consensus mechanism. Metropolis will achieve a few key things:
Zero Knowledge Proofs (zk SNARKs)
Ethereum and Bitcoin are considered “anonymous” by the mainstream media, however the reality is very different. Transactions can and have been traced back to individuals, and storing private data on a public blockchain is considered to be extremely insecure. The Metropolis release will integrate zk SNARKs into the Ethereum network, a method to anonymize transactions that was made famous by its use in the Zcash cryptocurrency. These zero knowledge proofs will enable users to privately store data on the blockchain, opening up an entirely new array of applications.
The Metropolis update was expected to include a “difficulty bomb” – a mechanism used to rapidly decrease the profitability of “proof of work” mining in the lead up to Ethereum’s hard fork to proof of stake. This difficulty bomb will effectively incapacitate miners on the old chain, helping to ensure a smooth switch-over to the new chain. The difficulty bomb is now said to be released in “part 2” of Metropolis (date of release currently unknown), however the mining reward, which is distributed roughly every 20 seconds, is likely to decrease from 5 Ether to 3 Ether to account for the coin’s recent price rise (and the relatively static USD cost of mining).
Interoperability between private (or “consortium”) Ethereum blockchains and the public Ethereum blockchain is anticipated to be a game-changer. Individuals and businesses will be able to seamlessly interact across platforms whilst harnessing all of the security, privacy and efficiency benefits that the blockchain protocol provides. Abstraction goes a long way to enabling interoperability and making Ethereum accessible to the mainstream.
Other upgrades to the network will also include decreased complexity for Ethereum programmers and the ability to pay Ethereum transaction fees with any cryptocurrency.
Ethereum price movements
Of course the price movement of Ethereum in the lead up – and subsequent deployment – of Metropolis cannot be “expected” by definition. However, past releases (Frontier – July 2015 and Homestead – February 2017) have both timed well with considerable upwards price movements. What’s more, mainstream media and investors are currently occupied with the ongoing situation between Bitcoin, Bitcoin Cash and Bitcoin Core (the possible 3rd coin on November 1st), and the Metropolis update appears to be flying under the radar. This Ethereum release in late September could blindside the market.