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Ethereum started 2019 in strong form. Its native Ether cryptocurrency gained 10% in the first week of January, and doubled its value since it hit $ 75 in mid-December. He has usurped Ripple to claim the title of the latter as the second cryptocurrency in the world.
Traders are accelerating the currency ahead of the next week's hard fork, which will see Constantinople's update applied to the blockchain.
At the same time, Constantinople will delay the so-called "difficulty bomb" – the process of gradually increasing the complexity of mining until it becomes unprofitable. This will help to keep the system stable and reduce the chances that a group of miners-led developers may try to force their own version of the blockchain to solve the problem.
Among the changes to be implemented are measures to reduce the premiums generated by the extraction of Ethereum from ETH3 to ETH2. This will reduce the supply of new coins on the market, helping to push prices higher. This pushed ETH to test resistance at $ 150 recently, with support found at the $ 140 handle.
What's a hard fork? |
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A difficult fork is where the retro-incompatible updates are applied to the blockchain code, forcing all the nodes of the system to be updated. Sometimes, as recently happened with Bitcoin Cash, two concurrent updates are applied, or a group of nodes reject the new update, causing the division of the block into two separate chains, each of which runs its own version of the cryptocurrency. It is not expected that the Ethereum rigid fork will cause a division in the network. |
But the supply restriction is only half the problem; the other is the question. And 2018 was a year categorized by a lack of demand.
The largest cryptocurrencies have dropped about 80% from the peaks at the end of 2017 / early 2018. Ethereum started trading about $ 1,400 last year. Over the next twelve months, the cryptography market has been hit by high-profile theft from trade, the threat of regulation and the lack of progress made in entering key markets.
Scalability is also a problem: blockchains all have a maximum block size and a creation time. This limits the number of transactions that can be processed and added to the chain. The number of transactions that Ethereum can process every second is currently in single digits; The Visa payment service provider can handle around 24,000.
The long-term plan for Ethereum will include updates that will increase transaction volumes to potentially over 1 million per second, but this remains far away.
The bulls argue that the cryptocurrency market has crashed and recovered in this way before. Bitcoin, which represents such a large portion of the market that usually drags its colleagues wherever they go, has experienced half a dozen such events. As a new resource, cryptocurrency is still going through a period of price discovery, and such cycles are predictable, many say.
In the case of the native currency of Ethereum, Ether, the latest appreciation is fueled by positive developments in the blockchain code, but it appears that, as its main cryptocurrent co-insurers, the rise for ETH remains limited until the market does not carry out a significant process of overcoming at least one of the major obstacles it faces.
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