Valid Points: What to Expect When Ethereum 2 0 Undergoes Its First ‘Hard Fork’

V a l i d P o i n t s : W h a t t o E x p e c t W h e n E t h e r e u m 2 0 U n d e r g o e s I t s F i r s t H a r d F o r k


Ethereum Hard Fork

One example might be a smart contract that disbursed funds to activists in an oppressive regime. It can’t simply be shut down by a cease-and-desist order delivered to an office, or even by sending in troops to cart away servers. That’s because that particular pool of funds exists as an application on the Ethereum blockchain, which is dispersed around the world on whatever servers run its code. People were watching in real time as the money was  stolen—like a live video feed of a bank robbery. By the end, the hacker, who has said that he was simply taking advantage of a technical loophole in the DAO, had amassed $50 million in ether, based on current exchange rates.

Ethereum Hard Forks

Ethereum Hard Fork

This new transaction type builds on EIP-2718 and introduces an asset list format to Ethereum. Furthermore, EIP-2930 also reduces risks of contract breakage otherwise introduced with EIP-2929. Also, if you have a generous amount of Ether, you should make sure to keep it in a safe place and choose hardware wallets, such as Ledger Nano X and Trezor. If you fancy hot wallets, though, you could keep some of your crypto on top-rated exchanges – examples include Binance, Coinbase, and Kraken, among others. All of the cryptocurrencies are worth as much as people use them – if the number of users declines, so will the crypto’s relevancy and, in turn, its price. During this time, certain transactions will be made via the Proof of Stake consensus to start preparing the system for the transition.

Is Ethereum 2.0 a Hard Fork?

Ethereum Hard Fork

In 2016 the DAO Hard Fork took place, which was a major event in that it changed the face and community of Ethereum. The launch of the ETH 2.0 beacon chain in December 2020 was also a major event; although not a hard fork, it established the new version of Ethereum that would be using Proof of Stake (PoS). Analysts had also noted the risk that something might go amiss as the new technology is implemented. Also, unlike many other cryptocurrencies, the Ethereum blockchain does more than just record transactions of the currency itself.

Ethereum Hard Fork

Switching Ethereum to a New Finality Protocol

  • Some want further innovation while some think ossification similar to Bitcoin’s blockchain is the way to go.
  • Hard forks generally require all nodes or users who wish to stay on the new chain to upgrade to the latest version of the software.
  • Ether (ETH), the second-largest cryptocurrency by market value after bitcoin (BTC), was initially steady afterward but started rallying about an hour later.
  • Naturally, a portion of the crypto mining population will find certain specific loopholes and ways out – resell the GPUs, rent out rigs or even start mining other cryptocurrencies, forgetting Ethereum as a whole.
  • It aimed to improve the overall efficiency and economics of the Ethereum network as it transitioned towards Ethereum 2.0.

When we reach the difficulty time bomb, the time it takes to mine a new block will be so long that profitability for miners will drop, and transactions will be too slow. Developers want to make sure that miners have no choice but to stop mining Ethereum 1.0 and move over to Ethereum 2.0 upon release. If a block becomes more than 50% full with transactions, the base fee increases and vice versa. This mechanism attempts to keep a half-full equilibrium level for the majority of blocks. The London upgrade introduced EIP-1559(opens in a new tab), which reformed the transaction fee market, along with changes to how gas refunds are handled and the Ice Age schedule. At its core, EIP 1559 is designed to make transaction fees on Ethereum less volatile and more predictable.

This has led to a heated debate between those who want to return the funds and the “code is king” purists who say that the the power of smart contracts lies in their immutability. There have been mixed feelings when it comes to the London network upgrade, mainly concerning transaction fees. Although miners are preparing for an end to Proof of Work with Ethereum 2.0, this update significantly altered the fees miners receive. This reduction may potentially lead to a decrease in the profits that miners make. Some argue that only the largest miners with the lowest energy costs will be able to operate at a profit.

This update included ommer blocks in the block count to ensure the difficulty could not be manipulated by adjusting the ommer rate (previously called the uncle rate). Forks are a little less dramatic for Ethereum than they are for less-centralized cryptocurrencies like Bitcoin. By being more organized, the Ethereum organization can develop longer-term plans that make forks a little less scary. Deflationary crypto can ensure that the token circulation reflects the size of the active network to help make prices more stable. If this sounds familiar, it’s probably because this is essentially a cryptographic version of the same tools that central banks use to control circulation and inflation in national currencies. But, first, we need to cover what the Ethereum London hard fork is specifically.

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Katerina Monroe
Katerina Monroe

@katerinam •  More Posts by Katerina

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