2019 could set in motion the recovery phase for the smart contracts platform Ethereum, as it looks to undergo its highly-anticipated Constantinople hard fork on January 16, 2019. The fork will occur at block height 7,080,000.
Ether (ETH), the cryptocurrency that powers the smart contracts development platform Ethereum had quite an eventful 2018. The digital token established its ATH value of $1,389 on January 14, 2018. This was at a time when ether was the fuel for the majority of the initial coin offerings (ICOs).
However, things have undergone a drastic change since then. Currently, ether is more than 80 percent down from its ATH value, trading at $129 at the time of press. The strict stance of regulatory bodies the world over towards ICOs has further marred the price of ether.
For instance, reports emerged in October 2018, about the correlation between ICOs and ether’s price volatility. These reports were debunked by researchers, however. They claimed that the majority of the ICOs had already cashed out their ether holdings, thus, they had no impact on its price movement.
Nonetheless, with the steady rise of the STO model of crowd-sourcing in the industry, it seems all but certain that the ICO days are nearing their end. The platform has also received stiff competition from rivals such as EOS and Tron throughout the year. Heated back and forth between Justin Sun and Vitalik Buterin on Twitter was not uncommon.
Regardless of the roller coaster in 2018, the Ethereum community continues to believe in the project and sees the upcoming hard fork as a fresh start. With that said, it’s important to examine some of the features of the Constantinople hard fork, and their long-term implications on Ethereum’s future.
Not a Contentious Hard fork
The term “hard fork” usually carries negative connotations with it, which should not come as a surprise. The recent hullabaloo regarding the Bitcoin Cash hard fork created more than sufficient drama within the crypto community, with Roger Ver and Craig Wright locking horns on social media.
This implies that the hard fork was not unanimously supported by every major figure within the BCH ecosystem, which resulted in the creation of two separate camps or blockchains, namely BCHABC and BCH SV.
On the contrary, the Constantinople hard fork is a non-contentious one. This means that while the hard fork might be low on entertainment value when compared to the infamous BCH hard fork, one could argue that it might prove to be much beneficial for the community.
In a non-contentious hard fork, the community unanimously agrees to switch from the old blockchain network to the newly formed one, presumably with better efficiency and updates. The old discarded chain slowly and steadily dies down due to the shift of developers and miners over to the new chain.
Furthermore, this won’t be Ethereum’s first hard fork. On October 25, 2016, Ethereum underwent a contentious hard fork which resulted in the creation of Ethereum Classic (ETC).
The official Wiki entry of Ethereum Classic reads in part:
“Ethereum Classic came into existence when some members of the Ethereum community rejected the hard fork on the grounds of ‘immutability,’ the principle that the blockchain cannot be changed, and decided to keep using the unforked version of Ethereum.”
Constantinople Is not a Switch to Proof-of-Stake Protocol
The switch from the PoW to PoS protocol has been on Ethereum’s agenda for a while. The Constantinople hard fork, however, is not associated with any kind of direct development towards the switch to the PoS protocol. The incoming change is merely setting the table for upcoming ameliorations.
It would seem that Ethereum enthusiasts might have to wait a bit more for the smart contracts platform’s transition to the proof-of-stake mechanism.
What EIPs Are Included in Constantinople?
There are a total of five Ethereum Improvement Proposals (EIPs) involved in the January 16 hard fork. These are EIP 145, EIP 1014, EIP 1052, EIP 1283, and EIP 1234. Looking into each of these proposals should make more clear the objective of Constantinople.
EIP 145: Bitwise Shifting
EIP 145 is primarily about the reduction of gas costs incurred while running the Ethereum network. Users and developers generally pay gas in the form of ether on the smart contract platform. However, with the successful implementation of EIP 145, these gas costs could become 10x cheaper than their current price. This adjustment could strengthen Ethereum’s prospects in the crypto industry and give it an edge over its rivals.
EIP 1052: EXTCODEHASH opcode
EIP 1052 specifies a new opcode, which returns the keccak256 hash of a contract’s code. In simple terms, this EIP helps in successfully verifiying the code when two smart contracts communicate with each other. It utilizes the functionality of hashes to speed up the verification process of smart contracts.
EIP 1014: Skinny CREATE2
EIP 1014 is the brainchild of Vitalik Buterin himself. This EIP helps in seamless interaction of the main Ethereum blockchain with off-chain transactions. For instance, it will improve the transactions between Ethereum’s main-chain and the Raiden Network, often touted as Etheuem’s Lightning Network. In a nutshell, the EIP will free up memory in the main-chain and execute transactions with its side-chains on separate memory space.
EIP 1283: Net gas metering for SSTORE without dirty maps
EIP 1283 deals with the minimization of gas costs associated with data storage. Perhaps the most technical of all the five EIPs, it basically makes it cheaper to execute transactions on the Ethereum blockchain.
EIP 1234: Constantinople Difficulty Bomb Delay and Block Reward Adjustment
EIP 1234 is responsible for the reduction in the mining reward from three ETH to two ETH per block. With the switch to PoS in the pipeline, developers want to ensure that the Ethereum blockchain does not freeze until the transition becomes feasible. This EIP should not be considered a step towards the PoS protocol in the future. It is merely paving the way for the implementation of the proposed protocol.
How will the Hard fork affect ETH holders?
For ether holders, there’s nothing to worry about. All their holdings on crypto exchanges, wallets, and cold-storage wallets will remain unaffected. They should, however, be cautious of fraudsters who look to exploit uninformed holders by asking for their private keys in exchange for airdrops.
If one is a node runner, it is advisable to update the node once the hard fork has concluded. Miners should reconfigure their mining equipment and ensure that it’s pointed at the new update chain as well.
Exchanges Supporting the Constantinople Hard fork
Major cryptocurrency exchanges like Coinbase, Kraken, ShapeShift, Binance, OKEx, and Huobi have announced their support for the upcoming hard fork. On January 3, 2019, Binance confirmed its support for the hard fork and advised users to leave sufficient time for deposits to be processed in full before the hard fork block height 7,080,000.
Crypto exchange behemoth OKEx also extended its support towards the scheduled hard fork. The platform informed its users that it will take a snapshot of all the OKEx accounts at block height 7,080,000. CEX.IO is the latest major exchange to support the hard fork.
Impact on Transaction Cost and Block Confirmation Time
While no exact figure can be provided with regard to the impact on costs and block confirmation time, it is safe to say the EIPs involved in the hard fork will definitely help the cause. It is expected that the blockchain confirmation time will remain at approximately 15 seconds.
Transaction costs are expected to drop due to the implementation of smart contract optimizing EIPs. Regarding the hard fork’s impact on the number of transactions per second, one could expect second-layer solutions like the Raiden Network, OmiseGo, and Loom Network to play more prominent roles in the future.