- Ethereum’s fate is dependant on its scalability.
- Casper update will transfer the network from PoW to PoS algorithm.
Ethereum, the second biggest coin by market value and the most popular platform for fundraising via ICOs, has been pretty volatile lately. After crashing to $166.76, the lowest level since July 2017, the coin swiftly recovered to $224 amid head-spinning volume growth. The coin has become a growth leader among top-1- cryptocurrencies on a 7-day time-frame, gaining nearly 10%.
However, the recent slump has raised some questions about Ethereum network vulnerabilities and fundamentals. The platform might have become a victim to its own popularity among startups and fintech companies, eager to jump this crypto bandwagon with their own coins and tokens. Over 1200 startups launched ICOs and raised over $18B through ERC20 tokens in 2018. This trend makes Ethereum’s ability to scale vital for the network sustainability and future success.
Earlier we reported that startups had sold nearly 300,000 ETH raised during ICOs in the past 30 days, increasing the downside pressure on Ethereum during the previous week.
This development brings another challenge to the focus. It’s the so-called difficulty bomb: miners need more and more time to solve the puzzle and get a new block. This slows down the network and will eventually lead to a complete freeze over. This state is known as Ethereum ice age.
Sounds scary, but in reality, both the bomb and the ice age are the tools developed by the Ethereum development team to take the network to the new stage of evolution by moving over to significant updates for Ethereum, including Sharding, Plasma, and Casper, the long-awaited proof-of-stake (PoS) consensus algorithm for Ethereum.
These updates are so significant that they will eventually lead Etherum hard fork where the old network will continue using the proof-of-work (PoW) algorithm, while the new one will switch to PoS.
Ethereum’s developers invented the difficulty bomb to make PoW mining too difficult and unprofitable to and force miners to switch to update to the new protocol, avoiding the risk of creating to functional networks.
The difficulty bomb was scheduled to explode early in 2019, but the dev team announced that the Casper update wouldn’t be ready by that time. That’s why, they implement Constantinople hard fork on October to introduce a scaled-back version of PoS, which will run alongside the existing PoW algorithm and buy the team more time to finalize Casper. Its full version is supposed to go live somewhere in 2019.
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