Monday, 14 October 2019

Fewer Than 16 Percent of Ethereum (ETH) Nodes Upgraded; Constantinople Hard Fork Three Days Away

The Ethereum (ETH) Constantinople hard fork will deploy a mere 15,000 blocks from now at block 7.08 million, which will happen in less than three days.
Since this is a hard fork, even in the best case scenario there would be two different Ethereum (ETH) blockchains for a short period of time.

This could cause transaction issues if Ethereum (ETH) or tokens are sent between the different chains. However, the situation is looking worse than expected because less than 16 percent of Ethereum (ETH) nodes — 1,180 nodes out of a total 7,600 nodes — have upgraded for Constantinople.

Crypto.IQ monitored node numbers over the past 36 hours, and the number of upgraded nodes has not risen. This could indicate one of two things:

It is possible that Ethereum (ETH) users simply are disconnected from the news and unaware a hard fork is coming. This sort of thing is a problem during any hard fork, and is one of the reasons cryptocurrencies tend to avoid them.

The other possibility is that this is an organized coup d’etat in which miners are deciding not to upgrade but remain on the old chain. This is a distinct possibility because the Constantinople hard fork is the beginning of a planned transition from Proof of Work (PoW) to Proof of Stake (PoS), a situation where ultimately all Ethereum (ETH) miners will be disenfranchised.

The Constantinople hard fork begins this process of disenfranchising miners by slashing block rewards from three Ether to two. Miners have already been undergoing extreme losses and stress due to the decline in Ethereum’s (ETH) price from $1,400 in January 2018 to less than $120 today. This drastic price crash has caused numerous miners to go out of business.

At this point, only the most hardcore Ethereum (ETH) miners remain, and many of them are possibly mining at a loss just because they believe in Ethereum’s potential. Now the developers and part of the community are trying to put these remaining miners out of business. The slashing of the block rewards is salt in the wound.

It gets worse. Numerous members of the Ethereum (ETH) community are calling for the banning of ASIC miners, especially after the 51 percent double spend attack on Ethereum Classic (ETC). Apparently, ProgPoW will be implemented in a soft fork within a few months, which would ruin profitability for ETHash ASIC miners.

Finally, PoW will be completely abandoned in the Serenity hard fork, which is likely the next hard fork after Constantinople.

So if Ethereum (ETH) miners are going to make a stand and fight for the survival of their enterprise, the current Constantinople hard fork would be the best time to do so. Miners can decide not to implement Constantinople to voice their discontent. If the numbers of upgraded nodes remain low through the deployment of Constantinople, an interesting philosophical debate will arise. If miners do not upgrade and are mining the longest chain on the “old” version of Ethereum, then is the old version of Ethereum the real Ethereum?

It seems quite possible that two versions of Ethereum could arise when the Constantinople hard fork is deployed: one which is favorable for miners and another which is operated by the dev team and transitioning to having no miners.

The uncertainty surrounding the possibility of an Ethereum chain split may be part of the reason Ethereum’s (ETH) price has dropped 22 percent in the days leading up to the Constantinople hard fork. If there really is serious tension during the fork and a chain split, then a crypto-wide market cap crash could ensue because numerous cryptocurrencies are tokens on the Ethereum (ETH) blockchain.

The price of Bitcoin (BTC) was in a narrow trading range near $3,600 since the crash on Jan. 10, but this morning, Bitcoin (BTC) quickly declined to $3,500. Bitcoin (BTC) remains well below the critical $3,900 level where CME Bitcoin futures traders likely took out short positions.

$3,900 continues to be the level to watch. If Bitcoin (BTC) exceeds it significantly, we’ll likely see a massive short squeeze, forcing short sellers out of their positions and potentially fueling a sustained rally. Otherwise, short sellers will remain in control, and we can expect persistent downward pressure on Bitcoin (BTC) until the CME futures expiration on Jan. 25.

Other major cryptocurrencies such as Ethereum (ETH), EOS, Bitcoin Cash (BCH), Ethereum Classic (ETC), and Tron (TRX) are faring worse than Bitcoin. The total cryptocurrency market cap recovered slightly to $124 billion on Jan. 11, but it has now dropped to $117 billion. This is still well above the $100 billion level we saw in mid-December during the worst of the bear market. That said, it is not out of the question that this level will be re-tested in 2019, and it will take a consistent long-term rally to declare that the crypto bear market is over.

The sharp crypto market downtrend on Jan. 10 appears to have popped the TRON (TRX) bubble. From Dec. 16 through Jan. 10, TRON (TRX) rallied from 0.0126 cents to 0.034 cents (170 percent). It has since declined 38 percent to 0.021 cents. TRON (TRX) is down 10 percent today alone, which is the day’s worst performance of any major cryptocurrency. The TRON (TRX) rally did not appear to have strong fundamentals behind it, and it appears to be turning into a classic pump and dump.

Ethereum (ETH) is showing pre-fork jitters. As of this Jan. 13 writing, the Constantinople hard fork is only 20,000 blocks away, with fork deployment scheduled at block 7.08 million. That’s a mere three to four days away, yet fewer than 16 percent of all Ethereum (ETH) nodes have upgraded to Constantinople. Since this is a hard fork, even in the best case scenario, there will be two competing Ethereum blockchains for a period of time.

If a significant amount of miners stage a coup d’etat by simply not upgrading, a new cryptocurrency that is more favorable for ETHash miners could form. Miners have an incentive to do this because Constantinople slashes block rewards from three Ether to two. Also, ProgPow, which greatly inhibits ASIC efficiency, will be implemented in the coming months. Ethereum (ETH) developers have explicitly stated that Proof of Work (PoW) will eventually be abandoned in order to make way for Proof of Stake (PoS), which would end Ethereum mining as we know it.

Perhaps the uncertainty about what will happen when the fork is deployed is the reason Ethereum (ETH) has declined 8 percent today to $116. Ripple (XRP) is solidifying its market cap lead over Ethereum (ETH), with a $900 million lead now, despite Ripple (XRP) dropping 4 percent today.

The other major cryptocurrencies that are going down today are Bitcoin Cash (BCH) and Bitcoin SV (BSV), down 8 percent and 9 percent respectively. Both of these cryptocurrencies have been performing poorly since the Bitcoin Cash fork in Mid-November.

Otherwise, all major cryptocurrencies are down. EOS is down seven percent, Stellar (XLM) is down two percent, Litecoin (LTC) is down five percent, Monero (XMR) is down five percent, and Dash is down five percent.

The current instability and downward pressure in the crypto market may intensify as the Ethereum (ETH) Constantinople hard fork approaches since numerous cryptocurrencies depend on the Ethereum (ETH) blockchain.

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