We Are Entering The Crypto Ice Age.

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With Ethereum ‘Ice Age’ Incoming, Momentum Builds for Miner Pay Cut

Corin Faife

With Ethereum ‘Ice Age’ Incoming, Momentum Builds for Miner Pay Cut

A vote currently taking place on ethereum’s mining rewards has motivated a big response from its community, despite the fact that its results are non-binding.

Described simply as a ‘show of preference’ by organizers, the vote is designed to indicate support for Ethereum Improvement Proposal (EIP) #186 – a change that, if implemented, would reduce the reward allocated to miners from the current level of 5 ethers per block to a lower figure.

According to the proposal’s abstract:

“A reduction in the issuance of ether is very likely to be price-supportive and lead to increasing investments in the platform and to help ward off speculative attacks on the value of ether by promoters of competing platforms who offer, or plan to offer, reduced token inflation rates.”

Besides the financial aspect, the proposal is also linked to the coming ‘ice age’, hard-coded into the technology.

At this point, ethereum is set to incentivize its transition from ‘proof-of-work’ (PoW) to ‘proof-of-stake’ (PoS) consensus at which time an exponential rise in block difficulty will make blocks virtually impossible to solve by PoW.

Price shift

In a conversation with CoinDesk, Matthew Light, software developer and author of EIP186, explained more of the logic behind his proposal.

Though it’s now receiving attention due to the vote currently underway, Light pointed out that the first version of the proposal appeared in December 2020, when ether was trading at a much lower value: around the $7–$8 dollar mark.

Since the low market value of ether equated to fewer funds for ethereum developers, Light said that original perception was that the ethereum project as a whole was being undervalued.

“At that time, I felt that it would be advantageous for everyone for the technology to be priced higher, and that reducing issuance would benefit that … But price has increased tremendously since then, so making it go up is no longer a critical issue,” Light said.

Raising the value of ether wouldn’t be the only result of a decrease in the block rewards, however.

The developer cited a recent Medium post from Vlad Zamfir, a core researcher at the ethereum foundation and architect of the forthcoming proof-of-stake system. In the post, Zamfir argues that over-incentivizing mining with high rewards attracts miners who are less concerned with good governance of the ecosystem as a whole.

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“When miners become more powerful, everyone else gets less of a say.”

The issue of governance is also at question in how the EIP itself is treated, coming as it does from a relatively unknown developer in the community, but having won widespread support.

“I actually don’t think the most important thing is to pass this EIP right now,” said Light. “What I think is more interesting is to see how the Ethereum Foundation will deal with it.”

Ether dilution

Although Light doesn’t consider the reward decrease a pressing change just yet, others think differently.

The current vote on the EIP is being held via carbonvote.com, which allows ethereum users to vote with ether tokens. The platform was originally set up for the community to vote on whether to rewrite the blockchain’s transaction history in the aftermath of the DAO hack.

On the table is the motion: “The ice age should not be extended without at least some decrease in block rewards.” Thus far, the tally is overwhelmingly favoring a range of affirmative responses.

Support for the motion – in which holders of ether get votes in proportion to the size of their holdings – is due to the fact that the coming ‘ice age’ will most likely be postponed due to non-completion of the PoS system by the necessary deadline.

Ether holders had anticipated that new ether would be mined more slowly after the ice age, increasing the value of coins already in existence.

Postponement of the transition, however, would mean a continuation of existing rates of mining, leading to an unforeseen increase in supply and dilution of the value of held coins – hence the motion to reduce the rate at which miners receive ether rewards if the ice age is delayed.

As well as benefitting holders of ether, Light believes that adoption of the proposal would also lead to a more carefully considered transition to proof of stake, since there would no longer be a financial incentive to keep to schedule.

“If there’s a reduction in issuance, there’s a lot less pressure from the community to get proof of stake released before perhaps it’s ready.”

Mammoth image via Shutterstock

Read more about.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Twitter Storms, Ice Ages and 20 Crypto Jokes

This week saw many crypto-related developments: FTT rallied after Binance invested in FTX, Ripple raised USD 200 million, Tron’s Justin Sun sparked a Twitter storm by publicly committing USD 1 million to Greta Thunberg’s cause, the Cryptoworld wondered if BSV is about to sabotage itself, Cardano price was bearish despite the testnet activation, and Chainalysis said that at least BTC 20,000 and ETH 790,000 might still be dumped on the market by the criminals from PlusToken. Two days later, PlusToken moved ETH 789,525. Speaking of ETH, Ethereum Foundation selling USD 100 million worth of ETH raised transparency questions, Ethereum will have another hard fork in January to delay its Ice Age, and DappRadar claims that ETH is now leading the field in blockchain gaming, ahead of EOS and Tron.

The CEO of Bitmain rival MicroBT is facing embezzlement charges in China, the latest court filing claims Craig Wright is not a victim in that process, and South Korean prosecutors busted an apparent USD 18.4 million multi-level pyramid scheme centering around a fake token. In the meantime, while TD Ameritrade-backed ErisX launches Bitcoin futures for small investors and Ping An subsidiary and Ripple-friendly SBI are working on bringing blockchain to banks, Fidelity is set to expand into Europe with a new UK-based branch. EU on its part asked citizens to help create crypto regulations. Meanwhile, in Japan, kids are proving to be too smart for crypto scammers.

Finally, check out these Christmas cryptogift ideas and then enjoy your weekly set of jokes.

Never has there been a truer prediction.

What if I told you #Bitcoin will definitely not make an all time high till next DECADE?

Taking about being wasteful.

Source: u/cooriah / Reddit

2020 in one pic.

Source: btcclicks / Instagram

It always starts with so much fun…

You can’t even know where the pain will hit.

As described by the survivors.

If only they knew.

Source: u/cameltoe66 / Reddit

What have you done?

Self-evidence at work.

Source: crypto_licious / Instagram

Some people require a tougher approach.

Me making sure people don’t use SMS 2FA and instead use U2F.pic.twitter.com/xU8MelBV8n

Haven’t we learned anything from the first video?

I don’t know if he’s dissing me or giving me what I want.

Source: cryptomemes.us / Instagram

When you can’t be completely sure you’re not watching a circus spiralling out of control.

…And jobs for all!

And just like that, everyone on Crypto Twitter found a job ✨ pic.twitter.com/5xMCiUXx4j

ALT Investors: We’re all on the same boat!

A Sisyphean task.

When you really want to know the words.

Source: cryptofunny / Instagram

And this is what you produce.

Them: so what’s this Bit Coin thing?

Good, I have two of those.

Source: cryptoaims / Instagram

The rhymes of the history.

Bill Gates trying to explain the internet to David Letterman in 1995. ����

The Future of Ethereum Part 1: The Ice Age is Coming

The Ethereum Ice Age is coming, but there’s no need to be alarmed. Despite the ominous name, the ice age is nothing to fear, nor is the related ‘difficulty bomb’ set to blow up the network. In fact, both the difficulty bomb and the ice age are tools created by the Ethereum development team that will play a key role in implementing Ethereum’s next major development update: Ethereum 2.0.

In Part 1 of this two-part series on the future of Ethereum, we will cover everything you need to know about the Ethereum ice age and the difficulty bomb. You will learn what these development tools are, why they were created, and why they have been in the news recently.

Then, in Part 2 of this series, we will cover the major updates for Ethereum that are currently being developed, including Sharding, Plasma, and Ethereum’s long-awaited proof-of-stake (PoS) consensus algorithm: Casper. Together, these components will make up Ethereum 2.0.

But before getting into Ethereum’s long-term plans, we must first take stock of where things stand and what is required before any of those major updates can be implemented, which brings us back to the ice age.

What is the Ethereum Ice Age?

The Ethereum ice age is a planned slowdown of the Ethereum network that was first introduced in 2020. The ice age itself is a result of a ‘difficulty bomb’ set to go off at a certain stage in Ethereum’s development—the same time that Ethereum will be transitioning from its existing proof-of-work (PoW) consensus algorithm toward the Casper PoS algorithm.

Since its release in 2020, Ethereum has utilized a PoW mining algorithm, known as ETHhash. Mining is used to maintain the security of the network, (used by many cryptocurrencies including Bitcoin, Monero, and Zcash) a process that involves ‘miners’ who use powerful computers to compete with one another in a race to solve a complex computational puzzle. Whichever miner finds the solution first is given the right to add the next block to the blockchain and is rewarded with newly minted cryptocurrency.

Most cryptocurrencies, including Ethereum, are coded such that the ‘difficulty’ of the mining algorithm changes with the number of miners trying to solve the puzzles. This system makes it so that the rate at which miners find the solution to the next block (and the rate at which new tokens are issued) stays relatively constant over time—even though miners are continually investing in newer, more powerful mining hardware.

This brings us to the difficulty bomb. As suggested by the name, the bomb is a point at which the Ethereum mining difficulty will explode—becoming exponentially more difficult over a short period of time. As the mining difficulty increases, so too will the amount of time it takes to mine each block. The difficulty bomb will be so powerful that the Ethereum network in its current form will eventually grind to a halt, a state which has been dubbed the Ethereum ice age.

Why Implement a Difficulty Bomb?

Upon first read, this may sound like a disaster. Why would Ethereum’s developers want the network to freeze over?

As mentioned above, the difficulty bomb is intended to go off while Ethereum transitions from PoW mining to the Casper PoS system. This change will be so significant that it will require a hard fork of the Ethereum blockchain. Once the Casper update is released, there will functionally be two Ethereum networks: the old network, which uses PoW, and the new network, which will use PoS.

With any hard fork, cryptocurrencies run the risk that miners will not migrate over to the updated chain and will instead continue to mine the old chain. This is essentially what happened with Ethereum in 2020; the network hard forked in order to return user funds following The DAO hack, but some community members refused to migrate over to the new chain. The two chains then existed in parallel—the updated chain was called Ethereum and the old chain was called Ethereum Classic.

To avoid such a situation, Ethereum’s developers coded the difficulty bomb as a tool to persuade miners to migrate over to the PoS chain following the Serenity hard fork (which will include the full implementation of Casper). The bomb will essentially make PoW mining on the old chain so difficult that it will no longer be profitable for miners to work on.

An August 2020 development blog post by Stephen Tual, Ethereum’s then-chief commercial officer, provides additional insight into the reasoning behind the bomb:

A lot of you have been wondering how we would implement a switch from PoW to PoS in time for Serenity. This will be handled by the newly introduced difficulty adjustment scheme, which elegantly guarantees a hard-fork point in the next 16 months … it works as follows: starting from block 200,000 (very roughly 17 days from now), the difficulty will undergo an exponential increase, which will only become noticeable in about a year. At that point (just around the release of the Serenity milestone), we’ll see a significant increase in difficulty which will start pushing the block resolution time upwards.

If you were paying attention to the timeline described in the above quote, you will have noticed that we are currently way off from the schedule that the Ethereum team originally intended. Indeed, the difficulty bomb has been delayed several times over the last few years because development of Casper has taken significantly longer than expected. The bomb must coincide with the release of Casper, so each delay in Casper has also brought with it a delay in the bomb.

Recent News on the Difficulty Bomb

The difficulty bomb has been a hot topic over the last few months because the bomb was last scheduled to go off in early 2020; however, the Ethereum team has announced that the Casper update will still not be ready by that time. As a result, the bomb needs to be delayed once again in order to provide more time for the Ethereum team to finalize Casper.

Ethereum is scheduled to have a hard fork called Constantinople on October 30th. This fork will introduce a scaled-back version of PoS that will run alongside the existing PoW mining algorithm in preparation for the full version of Casper, which is currently scheduled for sometime in 2020 (assuming there are no further delays).

With Casper still not ready and the Ethereum difficulty bomb set to go off in just a few months, many in the Ethereum community have made proposals for additions to the Constantinople update that will delay the bomb and address some related issues.

A range of community proposals surfaced to address the looming difficulty bomb. On August 31, the Ethereum development team decided on proposal EIP1234, which delays the difficulty bomb for approximately 12 months, while also reducing mining rewards on Ethereum from 3 ETH per block to 2 ETH. The delay will (hopefully) give the Ethereum team enough time to finalize Casper before the bomb goes off, and the reduced mining rewards will ensure that the number of new Ether introduced into the network won’t get too out of control as a result of the reduced mining difficulty.

The mining reward reduction also brings with it significant implications for Ethereum’s rate of inflation. Unlike many other cryptocurrencies, Ethereum has no cap on the number of Ether that can be created. The lack of a cap makes Ethereum more vulnerable to inflation than many other cryptocurrencies.

Prior to the reduction in rewards coming with Constantinople, the estimated rate of inflation on Ethereum was somewhere around 7.4%. Compare this to Bitcoin’s, which is estimated to be about 4.25%. Reducing the mining rewards from 3 ETH to 2 is expected to put Ethereum’s rate of inflation significantly closer to that of other coins and bring mining rewards more in line with the value of the network.

Conclusion

This concludes Part 1 of our series on the future of Ethereum. You now have a firm understanding of the Ethereum ice age, the difficulty bomb, as well as the changes to inflation set to come with October’s Constantinople update.

Keep an eye out for Part 2 of this series, which will cover everything you need to know about Ethereum 2.0, including Sharding, Plasma, and Casper.

Ethereum Developers Propose Hard Fork to Delay the Network’s ‘Ice Age’

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A new Ethereum Improvement Proposal (EIP) is suggesting a hardfork to the network, to solve the problem of the increasing network block difficulty called the Ice Age.

The team of Ethereum developers has announced a proposal for a new hard fork which is expected to solve problems currently associated with the Ice Age. In a recently published Ethereum Improvement Proposal (EIP) – EIP 2387 – authored by developer James Hancock, the new hard fork if deployed, would significantly “postpone” the coming of the Ice Age. Muir Glacier is named after a glacier in Glacier Bay National Park and Preserve, located in Alaska.

Hancock explains that the Ethereum network is able to maintain consistency in block production time because of the algorithm that continuously readjusts the difficulty. Specifically, the difficulty is increased for block times less than 10 seconds and reduced for block times more than 20 seconds. The Ice Age, also called the Difficulty Bomb, describes the difficulty in mining algorithm as it increases, which also affects block rewards paid out to the miners on the Ethereum blockchain. Simply put, the Ice Age basically stresses the Ethereum block production rate, affecting the entire network. Hancock noted:

“It artificially adds to the difficulty in such a way that the retargeting mechanism, at some point, can not adapt to the increase, and we see increased block times throughout the network. The ice age increments every 100,000 blocks. It at first is barely noticeable, but once it is visible, there is a drastic effect on block-times in the network.”

Hancock believes that the Difficulty Bomb’s current algorithm is a little too twisted for everyone and especially difficult to explain to the Ethereum community. He believes that changes made to the network’s design should be as straightforward as possible and somewhat predictable as well. This is something he believes that the Muir Glacier hard fork will very easily handle:

“This fork would give us time to address the community to understand their priorities better as far as the intentions of the Ice Age, and give time for proposals for better mechanisms to achieve these goals.”

Hancock says that Muir Glacier will “push back the Ice Age as far as is reasonable” which will allow the team enough time to create an upgrade devoid of these problems. In the time when Ice Age is postponed, Hancock suggests two solutions. Firstly, an update could be created such that the “behaviour is predictable”. Another solution would be to completely eliminate the phenomenon.

The Difficulty Bomb has previously been extended with the first occurrence pushing it by 3 million blocks when the Byzantium hard fork was released in 2020 and the second in February this year, with the Constantinople hard fork.

In other Ethereum news, Ether (ETH) has not been performing favorably enough and has been losing weight. The market’s second-largest asset by market cap has fallen below the $148 support mark and is at $146 at press time. ETH tried to push past $150 recently but failed to hold above it, before the bearish turn that drove it down below $148. While it still fluctuates, the only way for any silver lining, however short term, is for the $148 resistance level to be broken and maintained.

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

We Are Entering The Crypto Ice Age.

It’s the crypto ice age — I think we’re past calling it just a “winter” — and the crypto media frantically circles a dwindling pool of promotional cash.

CoinDesk lives on conferences and promoting Digital Currency Group properties with varying degrees of subtlety — and it’s always been full of uncritical boosterism.

Decrypt lives on Consensys patronage, and the boosterism has been through the roof of late. Breaker Mag died of SingularDTV stopping its patronage.

The Block are massive coiners, so the site’s very into promoting crypto as a whole — but the subscription model means the incentives are correct, and they do observably piss off the right people. And I won’t state numbers, but they’re apparently doing quite well.

Modern Consensus was foolish enough to lose Amy Castor, who’d made it actually a good publication worth reading for a month or so. I guess MC will just get back to shilling Bitcoin SV. [blog post]

All the other sites are worse — an infinite sea of crappy crypto shill blogs.

There’s individual excellent writers at all of these publications — a lot of these people are great, they’re friends I respect, and I follow them avidly — but journalism costs money.

And there’s no money for journalism in crypto — particularly for anything that even admits the possibility of rocking the boat as a whole.

(There’s not much funnier than some bozo who’s been caught out perpetrating shonky nonsense, furiously demanding to know what you’re BUIDLing instead of being so negative. I’d say not perpetrating shonky nonsense counts as a net positive, actually. Crypto journalists looking for a story should do Twitter searches for “buidl”, then go up the thread to spot whatever scam is being called out.)

I’m hearing more reports of writers leaving their publications in disgust when they are, literally in some cases, told to stop criticising crypto — meaning, even on an obvious 2+2=4 factual level — and “be more positive” — i.e., run the press releases unedited, because the boss is chasing that dwindling pool of crypto shill bucks.

The only decently-funded sources of critical journalism about crypto are in the mainstream financial press — who do well from paywalls, because their customer base has money.

It’s the same across all of journalism. I suspect subscriptions directly from the readers themselves is the least-unviable model — the Wall Street Journal and Financial Times do well with a low and easily-hopped paywall, and the Guardian is doing well with no paywall at all.

There are local journalism startups that run on the reader patronage model too, and there are specialist sites getting into the model. You won’t get rich from it — but you’ll get to do actual speaking-truth-to-power journalism.

(No, po.et and Civil’s journalism-on-the-blockchain ICO experiments were never going to work. Nobody who wasn’t high on blockchain fumes could see how this nonsense could possibly function. And, in a completely predictable turn of events, Civil ended by ripping off its most loyal journalists.)

My Patreon pays expenses and beer money — it’s not a living, but it really does help. And my Patrons are excellent co-conspirators. Amy’s restarted her Patreon, and you should throw some bucks her way too.

Also, if you need a nocoiner for your blockchain panel, pay me and I’m so there. I give great panel. (We’re supposed to go out on the road doing gigs these days, right?)

I’m getting into the habit of firing up LibreOffice and working on book content even when I really don’t feel like it. It turns out that persistence is the secret. I think I’ve convinced Amy to do the book on Quadriga too.

Your subscriptions keep this site going. Sign up today!

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