Ethereum Network & Its Problems
After Ripple’s XRP overtook Ethereum to become the second largest cryptocurrency, Ethereum has also set a new record. For the very first time, Ethereum’s price exceeded $870. These incredible price surges are happening despite Ethereum’s problems. Just like bitcoin transaction costs have become very high, transaction costs on the Ethereum network are also increasing. Furthermore, due to a bug in the Parity Technologies Ethereum wallet, millions of dollars in Ethereum were frozen. Then there was the popular CryptoKitties game which clogged up the Ethereum network to the point that the number of pending transactions increased by 6 times.
Upgrades to Ethereum Network
There are some scheduled upgrades to the Ethereum network that seem very promising. For example, these upgrades could enable Ethereum to process as many transactions as Visa. How could this be achieved? First of all, Ethereum will be switching over to the proof of stake algorithm (PoS). Currently, Ethereum uses the proof of work algorithm (PoW). The “switching over” process is a little tricky though. This is because, according to Vitalik Buterin, the Ethereum network will implement a customized version of the PoS. It is called the Casper Friendly Finality Gadget (FFG).
There have been some issues with the proof of stake algorithm, so FFG will attempt to “fix” those issues. It plans to do this by implementing a sort of hybrid of PoS and PoW. If successful, the Ethereum network will be able to scale effectively. This new method, or upgrade, which is referred to as the Casper update, is very complex and is a product of multiple research projects. In a nutshell, the benefits will include a much greater efficiency level in terms of energy (electricity) expenditure, better decentralization and scalability, and security.
ETH Could become Scarce Temporarily
Although relatively few people might truly understand the intricacies of these upgrades to the Ethereum network, the market seems to have faith and belief in what these upgrades promise to deliver. One indication of this might be that Ethereum’s price continues to rise. One key thing to note here is that the ETH mining market will be transitioning over to proof-of-stake algorithm. As a consequence of the transition, ETH won’t be mineable for long. With the shortage of supply, ETH prices could go up even more.
More Important than Price
Even though the current rise in Ethereum value is great, what truly matters most is the long-term success of the Ethereum network. If these upgrades will be able to deliver on their promises, then it would lead to more widespread adoption by various industries. The EOS platform has become popular because of its promise to process millions of transactions per second. If the Ethereum network can scale and accommodate enterprise-level applications, then it will definitely open up new doors and opportunities for a myriad of real-world, practical uses.