In this post, I'm going to talk about important future upgrades in Ethereum and what the consequences may be.
First of all, Metropolis, or Ethereum 3.0 is planned for August or September. The last major upgrade, called Homestead, was more than a year ago. So, Metropolis will be kind of a new era in Ethereum system and is going to change lots of things.
Here is a video:
Now , let’s break it down. One of the biggest new features will be Zk-Snarks, which means customizable privacy settings. At this moment, Ethereum is not as anonymous as Zcash or Monero. But with the update, you will be able to choose whether your transactions are private or public. It uses the same standard as Zcash, but is implemented on a protocol level on top of Ethereum platform. Ethereum Enterprise Alliance has big plans on this upgrade. JP Morgan is working with Zcash to put this feature into Quorum, which is JP Morgan’s own private Ethereum chain. So, customisable privacy has enormous potential, especially as the cryptocurrency payments are becoming more common.
Another major upgrade will be Raiden Network. As you probably know, maximum amount of transactions is quite a big problem with cryptocurrencies. Ethereum can manage 15 transactions per second, but it’s nothing compared to Visa, which handles 40000 transactions per second. Well, Raiden upgrade will enable more than a million transactions per second. It will be possible with “payment channels”. The basic idea is that Ethereum will switch from a current model where all transactions are added to the shared ledger of the blockchain to a model where users can privately exchange messages that sign the transfer of value. Raiden is meant to be an extension of Ethereum and will work with any token that follows ethereum’s stadartized token API. This upgrade is potentially game-changing as well.
Next important change in Ethereum network will be Ice Age, which will slow down the creation of coins. At this moment, there is roughly 93 million eth with 5 coins created every 15 seconds. Ice Age was introduced in 2015 and was meant to be a “difficulty time bomb”. It has been slowing down creation of new coins and forced developers to finish metropolis before the network would eventually freeze up. Ice Age also reduces rate of inflation but increases the transaction time. By August , there will be 5 ethereum coins created every 30 seconds.
This process plays its role in foundation of the next huge thing that will follow metropolis- the Casper algorithm. Release date of Casper is unclear, but it’s for sure going to change the whole Ethereum network. According to plans, Ethereum will start a slow but steady process of moving from proof of work to proof-of stake method. When Casper will be fully implemented, validators will replace miners. They will need to lock up desired amount of their own Ethereum coins , which is called a stake. Now how it will work: if you become a validator, your stake will be locked up in a smart contract and you will have to run software on your computer. Casper algorithm will distribute rewards for validating each new block according to amount of Ethereum that users have put as a stake. As Vitalik Buterin stated, validators will earn 6 to 12 % interest annually. If you try to use your stake in a malicious way, it will be destroyed. This is one of the main security advantages.
So, all in all, Ethereum will be getting extremely important upgrades in the next months. Nobody knows how successful they are going to be, but the future is indeed very exciting.