The cryptocurrency sector as a whole has had a turbulent twelves months. However, hopes are rising for cryptos’ future following news Ethereum – the world’s second largest cryptocurrency – could at last receive a long-awaited update. And this upgrade, known as the Constantinople hard fork, is expected to trigger a spike in bullish sentiment across the entire cryptosphere.
Piers Courtney, an analyst at cryptocurrency broker GlobalBlock, said: “Forks are a way of introducing new features and fixing issues in the system.
“To ensure that things don’t go wrong, everyone running the blockchain software – the ‘nodes’ must update, so everyone has the same features and fixes.
“The blockchain splits into two chains – the new ‘road’ and the old one.
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“The new one contains all the new features and fixes and the old continues on as if nothing changed.”
Those running the nodes must then decide which fork to support.
Non-contentious forks sees users abandon old software and the chain naturally withers and becomes obsolete, meaning the coins lose their value.
And contentious forks sees both roads of the fork flourish and retain their value.
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This is how bitcoin cash split from bitcoin, for example.
GlobalBlock’s Piers Courtney explains the ramifications for the forthcoming fork: “The update is currently non-contentious and it’s fully expected that the Ethereum blockchain will proceed down this new path.
“The proposed fixes and updates will result in shifting the cost of operations.
“Currently the ‘gas’ – the equivalent of a transaction charge – cost is 35 an operation and this will drop to a cost of 3.
“In addition, there will be a lowering of cost toward running a node.
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“In short, the changes are there to make the cost of running the network cheaper.”
For these factors, the outlook is positive for Ethereum and consequently the rest of the cryptosphere.
This is because of three inter-related reasons: Ethereum miner rewards fall from three ether to two and decrease the block time, resulting in a faster network.
And Oracles – information fed into contract from third parties – will inevitably drive adoption of Ethereum smart contracts.
So, as adoption and utility of Ethereum smart contracts increase, so will Ethereum’s price.