Currently, there are few things to cheer about in the crypto market and one of them is the latest successful implementation of new upgrades in the Ethereum blockchain. Although sources have reported that the average users might not notice significant changes in the functionalities of the blockchain, yet it is important to note that the upgrade is a first of many steps towards viability.
In this publication, we will highlight the importance of Ethereum’s latest upgrades to the crypto space.
Why Was The Upgrade Needed In The First Place?
People familiar with Ethereum would know that there is a lingering debate on the viability of the blockchain’s current consensus mechanism, the Proof of Work (PoW) mechanism, which is energy consuming and cost inefficient. As a result, there is a move to replace this generally unviable mechanism with one that would improve the scalability of the blockchain while ensuring that the process of verification is invulnerable to attacks.
This is where the much-anticipated Proof of Stake (PoS) mechanism comes in, and judging from the latest implementation, the Ethereum blockchain is almost ready for this drastic change. As such, the latest upgrades majorly focused on scalability implementations and protocols that would significantly reduce the operating energy and cost of the network. The difficulty bomb delay implementation that comes with the latest upgrade is particularly important as it suggests that the countdown to the end of the PoW mechanism on Ethereum might begin in the next 12 months.
The difficulty bomb acts as a mechanism that increases the difficulty of the computational process that comes with mining new blocks until it becomes totally impossible to create new ones. Apparently, this will encourage more miners to ditch PoW mechanism as it becomes increasingly unprofitable to use this consensus mechanism to mine. Most notably, delaying this implementation for the next 12 months will give the network an ample time to debate the issue.
Truth be told, the upgrade is a big deal if you consider the fact that network congestions on the Ethereum blockchain often create a ruckus, which tend to decrease the speed of transactions as well as the cost for each transaction. Therefore, Ethereum had to implement the upgrade in order to set the groundwork for other scalability-related solutions that are still under development.
Why Is The Upgrade Important To The Crypto Space?
Now that we have looked at the purpose of this upgrade and how it tends to improve the functionalities of the Ethereum blockchain, it is crucial that we dissect its implications to the crypto space in general.
Regardless of the fact that there are new are more scalable alternatives for Dapps developers, other than the Ethereum blockchain, yet it is only second to the bitcoin blockchain when it comes to the popularity. This demonstrates the influence of Ethereum to the general outlook of the crypto market and it suggests that the just concluded upgrade is not only of importance to the Ethereum community.
Owing to the fact that Ethereum continues its dominance in the crypto market, blockchain apps developers are still very much into launching their platform on the Ethereum blockchain. And with the newly introduced energy and cost-efficient upgrades, it is clear that running blockchains on the Ethereum network is looking more viable. Perhaps, this show of competitiveness will re-establish Ethereum’s fading dominance and lead to a resurgence in activities that once led to the unprecedented Bull Run in 2017.
More importantly, the new upgrade slashed the reward per block from 3 ETH to 2 ETH in a move to reduce the inflation rate of Ethereum. This is an approach that relies on the fundamental supply and demand principle. In a way, this makes sense as a reduction of the supply rate of Ethereum would lead to an increase in demand thereby reducing the inflation rate. Although the practicality of this approach is still speculative, yet it is safe to say that crypto investors would definitely find this development interesting.
Nevertheless, this upgrade has had little or no effect on the price of Ethereum, however, it is important to understand that the implementation is leaning towards feasible viability that would ensure that Ethereum as a say in the much-anticipated crypto bull run. Therefore, rather than focus on the negatives of the crypto market and roll out quick fixes, instead the network has done the wise thing by focusing on long-term solutions.
For what it is worth, the success of the Ethereum blockchain in terms of scalability is the only factor that can guarantee that the blockchain will retain its prominence in the future. This is true for cryptocurrency relatively. As such, the recent development, which is a step in the right direction, is not just a victory for the network’s community; rather it is one that the crypto community should savor collectively.