Ethereum Runs into a Difficulty Spike, Bitcoin Dev Smells Disaster in January Hark Fork
December 17th, 2019
Ethereum recently went through the Istanbul hard fork on 8th December 2019. It was one of the first in a series of hard forks to shift to PoS.
However, in a surprising turn of events, the developers at the Ethereum Foundation have come to a realization that they forgot to upgrade something!
As reported earlier on CoinGape, Tuur Demeester, a crypto analyst and founder of Adamant Capital cited that Ethereum’s Ice Age is a to worrying for the ecosystem. The proposal for Muir Glacier was drafted by dev,
Furthermore, Peter Todd cited the difficulties of scheduling multiple hard forks in a short period.
While the network still hasn’t recouped from the troubles in the previous hard fork, they are preparing for a new one. Udi Wertheimer, a blockchain programmer, and Bitcoin maximalist cites how Ethereum devs are backed up against the wall. He tweeted,
The next hard fork? It’s in TWO WEEKS. Why? Because otherwise, the Ethereum blockchain would slow to a crawl.
Did Ethereum Devs Forget about the Ice Age Bomb?
Wertheimer also cites that this update includes only one improvement, i.e. to get rid of the ice age difficulty. Therefore, looks like the leading Ethereum devs and nodes committed a blunder by ignoring the issue. He notes,
they forgot to actually push the Ice Age forward as they usually do. Yep, forgot. They thought it isn’t time yet.
The said mechanism increases the inherent difficulty for the miners. However, the mining rewards reduced this year and the increase in difficulty further would slow down the network and hurt mining nodes.
The delay in the update to Ethereum 2.0 is one of the leading reasons which has driven the network to a difficult threshold.
On 14th December, the difficulty of Ethereum mining saw a spike while the hash rate remained constant. Hence, the time is running out for the network to sustain its ability to run.
How will it affect Production?
Ethereum’s daily rate of block rewards or infusion of new coins was above 15,000 ETH/per at the beginning of the year. However, the last couple of weeks has been a decline in this rate possibly due to the uncertainty around the changes and rising difficulty.
The inflation of new ETH is around 10,000 since December 14, 2019. According to Wertheimer, this will change early in January after the update. He cites that this will increase inflation,
Essentially inflation became lower for a while, and it will be spiked back up in two weeks. This kind of CRITICAL change is being done with no oversight or backlash, almost as an afterthought.
Hence, if the rate of supply increases, the sell-off by miners would increase as well. This could cause a dent in the price.
Moreover, the two consecutive hard forks require the operating nodes to update to the new versions. For a large network like Ethereum’s, this can cause a lot of chaos deterring node operators away from Ethereum.
Furthermore, it also raises concerns around the decentralization of the cryptocurrency. Subsequent hard forks are not practical for a decentralized network.