What Traders and Investors Should Know About the Upcoming Ethereum Fork

Crypto Coin Growth

Crypto is about the Timing… And Times are Good

CCG News

What Traders and Investors Should Know About the Upcoming Ethereum Fork

What Traders and Investors Should Know About the Upcoming Ethereum ForkThe Ethereum Foundation, an entity that oversees development of the Ethereum blockchain and its two main tokens, is urging miners, investors and traders to exercise caution as an upcoming upgrade approaches. Known as Constantinople, the next system upgrade is expected to create what is known as a hard fork, a situation that results from a split opinion among developers and miners. A hard fork causes a new cryptocurrency token to be issued, and this means a new avenue for mining, trading, and speculation.

Meet the Constantinople Upgrade of Ethereum

Lack of consensus on system upgrades is something that has been experienced more than once on the Bitcoin blockchain, which has resulted in the issuance of Bitcoin Gold and Bitcoin Cash tokens that now compete against BTC. The Ethereum blockchain has previously been forked, and this is why the Ether tokens that trade on the major cryptocurrency exchanges are differentiated as ETH and ETC, the latter known as Ethereum Classic.

One of the changes being introduced by the Constantinople upgrade is the delay of the algorithm that rewards Ethereum miners for their work in supporting blockchain transactions. The proposal at this time would reduce mining difficulty as well as how much of a reward miners can get. There are many other changes within the Constantinople upgrade that will optimize the Ethereum blockchain, which happens to be the most popular and efficient as of 2019, but none of them has caused as much animosity as the algorithm delay.

Developments Investors Should Watch

To a certain extent, a cryptocurrency hard fork is similar to a stock split in the sense that current token holders would be rewarded with a new token; unlike stock splits, however, there is not a single company trying to create shareholder value. Ethereum is decentralized, but there is a strong chance that a core team will form around the new token for the purpose of driving up its value. As has been seen with Bitcoin Gold and Bitcoin Cash, there is a high potential of a social media storm brewing to promote one token over the other.

It is important to note that ETH has been enjoying a strong comeback since December 2018, and it is directly related to the Constantinople upgrade, scheduled to take place on January 16. Purists who simply believe in the superiority of the Ethereum blockchain do not want to see a hard fork happen, but only time will tell whether this will happen or not. It is even more important for Ethereum blockchain development to continue on a technological basis.

About Author