The final quarter of 2018 was looking pretty grim for Ethereum. Between early September and mid December the price of Ether saw a decline from $280 to as low as $80.  Suddenly, however, Ethereum seem to have found new vigor and the price recovered to $160. This instilled a lot of new hope (and fomo?) in several people.

But just when price action took a turn for the better, Ether took another lurch downward back to $120. A lot of people who got bullish at the $150-$160 area saw staggering losses. The question is… Could this have been foreseen?

Perhaps.  There were a few red flags right from the beginning. In this weeks Ethereum Price Update we’ll go over some of the signs that pointed toward this move potentially playing out.

On November 14th 2018, Bitcoin Cash was to undergo a hard fork – a big event in the crypto world. Two weeks prior to the event, Bitcoin Cash began to rally. The price surged upward from around $410 to $630.  However, seven days before the actual date of the event – the price began to decline. And it do so rapidly! In the next seven days leading up to the event, Bitcoin Cash dropped all the way back down to $410. It literally gave back all it’s gains.

Now, a lot of people are going to say “No!  the Bitcoin Cash fork was contentious! The Ethereum fork is a bullish update!”

The truth is that it doesn’t matter what the event actually was. All that matters is the crowd-psychology and the emotions people go through leading up to the event. For example, these are a couple of possible mindsets:

Bitcoin Cash Fork:  “Omg, this is my chance to get free coins! I’ll buy and sell right after the fork”

Ethereum Fork: “Omg, this update is so bullish. I’ll buy before the update and sell when things get crazy!”

In both situations, ‘investors’ are being baited to buy the top – and then inevitably get dumped on.

Follow up Reads:
1. Ethereum Consatantinople Update 2019
2. Ethereum Roadmap Update
3. Ethereum Difficulty Bomb & Inflation Rate Explained

In a previous post we discussed the Ethereum Roadmap for the coming year. One of the key milestones on the roadmap update was the Constantinople hard fork. Constantinople was initially scheduled for 2018. However, due to inevitable software development delays, Constantinople was pushed to early 2019. That being said, the wait has definitely been worth it.

Constantinople has been much awaited by the community primarily because of the Block Reward reduction. The Block Reward reduction effectively reduces the inflation rate of Ethereum. I explain how in a simply post here: Ethereum Inflation Rate & Difficulty Bomb  However, aside from the Block Reward reduction, there are few other exciting improvement updates in Constantinople which is scheduled for Jan 16th 2019.

In this post I will explain these updates simply and briefly! 🙂

So what exactly is Constantinople? Is it a Hard fork? If so, will you be getting two coins? (like all the other hard fork fiascos?)  Yes, Constantinople is a Hard fork - but you won’t be getting two coins. Unlike the other fiascos, this isn’t a “contentious” fork. To understand this, let’s go over a couple of terms quickly & simply:

1. Block Reward Reduction ← A BIG ONE!

2. Cheaper Smart Contract Execution

3. Increased Efficiency on Verification of External Smart Contracts

4. State Channels!

5. Storage Cost Improvements

Block Reward Reduction: Constantinople will officially mark the reduction of the rewards issued to miners from 3 ether to 2 ether. This effectively reduces miner rewards by ⅓  and is often referred to as “The Thirdening“. This reduction in Block Rewards will significantly reduce the inflation rate of Ethereum.

Ethereum Inflation Rate Definition (Quick'n'Dirty)
 The speed at which each Ether loses it's purchasing power/value.

Constantinople will include the EIP145 proposal which will introduce “Shifting operators” to the Ethereum Virtual Machine. Put simply, this will allow Smart Contracts to initiate certain instructions for only 3 GAS compared to the 35 GAS it would have costed without the Shifting Operators.

This is a drastic reduction in the cost of these operations and contributes to Ethereum’s efficiency improvements.

This is another key efficiency improvement in the 2019 Constantinople update. Smart Contracts often need to perform verification checks on other Smart Contracts. Currently this is done by copying the bytecode of the external Smart Contract and then performing the needed verification. However, this can unnecessarily expensive when dealing with large Smart Contracts.  EIP 1052 tackles this problem by introducing a new function that will allow the Smart Contract to pull a hash of the bytecode instead.  This will make verifications far more efficient.

The Ethereum Constantinople 2019 Update will also include a keystone update for State Channels in Ethereum. EIP 1014 will allow interactions be made with addresses on the main chain that don’t exist yet .  This may sound confusing but is a key milestone for the implementation of State Channels. The goal of State Channels is to have as little load on the main chain as possible while still remaining secure. Unnecessary calculations and processes will take place off chain – thereby increasing the efficiency of the main Ethereum chain.

Constantinople will also include an update that will reduce the storage costs in Ethereum. EIP 1283  proposes a change to how gas is charged for EVM storage operations. The primary initiative of this proposal is to reduce excessive gas costs where unwarranted. And to enable new use-cases for contract storage.

With this, transactions that are making multiple updates to the same storage slot will cost significantly less!

​​​Ethereum’s soon approaching Constantinople hard fork, while significant, is still only a piece of the larger puzzle that is Serenity – Ethereum’s transition to Proof of Stake. ​​​

Follow up Reads:
1. Ethereum Roadmap Update
2. Casper v2: Beaconchain & Sharding
3. Ethereum Difficulty Bomb & Inflation Rate Explained