Ethereum Weathers the Storm Better Than Most

Ethereum Weathers the Storm Better Than Most

By Benson Toti - min read

Even though September has been a disappointing month for the cryptocurrency space, Ether has maintained value the best of all the large coins. This is largely a reflection on some fundamental upgrades that have occurred on the platform, and now ETH is trading around $179. 

Bitcoin looks to be down more than 15% this month, with an unexpectedly negative Q3 occurring after it looked bullish for so long. The final result is an ETH/BTC rate of approximately 0.0215 BTC, which is much higher than the lows of 0.016 BTC that occurred in early September. 

Ethereum’s Istanbul Upgrade

What is interesting is that Ethereum has experienced issues with the implementation of an upgrade, but has performed well regardless. 

On Monday, a system-wide upgrade called Istanbul was implemented onto the Ropsten test network of Ethereum. Ideally, this upgrade increases network efficiency for all, but right now, it is looking like there will be some hiccups along the way. 

For example, governance platform Aragorn is expected to have approximately 680 smart contracts break due to the code changes in Istanbul. The smart contracts on Aragorn are used to manage decentralized applications (dapps) on the Ethereum blockchain and a forced upgrade will need to be executed in order for the smart contracts to continue to function properly. 

This is being seen as a tradeoff that is acceptable to the larger Ethereum community, although it is a frustrating reality for the Aragorn team. Kyber Network is said to only have one smart contract that will be affected. 

Fixing Scaling Issues

The Istanbul upgrade, also known as Ethereum Improvement Proposal (EIP) 1884, is being implemented to mitigate some of the downsides of Ethereum’s growth. 

The computational cost of retrieving account balances or any other data about the overall state of the network is continuing to increase. However, gas prices are not increasing, which leads to a deficient when you look at the cost of operation compared to the resources being inputted. As a result, EIP 1884 will implement higher gas prices for 3 operations on the network. 

The Istanbul upgrade has been implemented early due to faster than usual confirmation times. As a result, the Ropsten network has forked because of the majority of miners not being ready to upgrade their software.

Originally planned for October 2nd, the upgrade was released two days earlier than planned which means many of the developers on the network were caught off guard. Proof-of-work blockchains like Ethereum require the miners to make manual upgrades to their software in order for the chain to continue smoothly. As such, right now the network is split between miners using the upgraded chain and miners using the outdated one. 

It is important to note that the issue so far are to due with communication between the miners rather than due to issues with the code for Istanbul. Additionally, this is a testnet and mistakes like these do happen, but these are a few clear hiccups in the governance of Ethereum. If traders are putting more faith in Ethereum than other coins right now, that must be a reflection on the long-term potential rather than these short-term problems.