Ethereum will undergo a planned hard fork sometime in late September, transitioning into the second official major upgrade of the Ethereum network.
This upgrade has been anticipated since the release of Ethereum’s <a>road map</a> earlier this year, and arrives just at the end of the developer’s projected time-frame for implementation. The fork will provide a number of updates to the network, and this upgrade fix some of the concerns and criticisms that Ethereum has faced. Metropolis is the second upgrade to the Ethereum network – following the original Frontier release, and the first hard-fork upgrade, Homestead. Metropolis is intended to be the “penultimate version” of the Ethereum network, setting the stage for one final fork and major upgrade.
There are several significant changes that the Metropolis update will implement. Two of these – zk-SNARKs and “account abstraction” masking – are focused primarily on security, anonymity, and privacy. The smart contract functionality of the Ethereum network will also be getting an upgrade, increasing automation and reducing costs. Finally, the planned “difficulty bomb” will be delayed as the Ethereum network begins to enter its so-called “ice age” ahead of schedule.
Let’s break down each of these upgrades:
A zk-SNARK proof is a method of verifying that one party possesses particular information, without actually revealing said information to the other party. zk-SNARK, which stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” was first widely implemented in Zcash – which shares some developers from the Ethereum network – and is what gave that currency its sincere guarantee of privacy.
What this means for the Ethereum network is that transactions can now be completed and verified on the network, while information within said transactions remains private. One popular example is voting, wherein anyone could verify someone’s vote on the blockchain without revealing the actual vote.
This added security protocol allows the user to determine the address they have for the private key, using existing protocols (such as RSA.) This update will not be relevant to most users, but is a boon for the security-minded user that would total control over their private key – down to choosing the key themselves. Further, it improves security on the network by preventing the private keys to be revealed from their hashes, even via attacks from quantum computers.
Smart contract update
One of the more significant updates to the system in terms of widespread usage, is the upgrade to the smart contract system. With Metropolis, smart contracts will have the ability to automatically and autonomously settle fees, without needing user approval. Smaller changes to the network will also make the use of smart contracts on the network simultaneously more secure and faster.
The Ethereum network has a intentional design “flaw,” meant to spur users to accept radical improvements and upgrades as the network progresses. This is known as the Ethereum”Ice Age,” or “difficulty bomb:” over time, the network intentionally implements a minuscule increase to the amount of time it takes to mine a new block. This leads to an eventual slowdown of new block creation that ultimately “freezes” the network. This solved as the network implements the Casper proof-of-stake (virtual mining) mechanism.
Casper was intended to roll out with the Metropolis update. However, due to the development set-back caused by the DAO hack, the increase in difficulty outpaced the time-frame for the switch to a proof-of-stake network. As such, the Metropolis fork includes a delay in the difficult bomb, as well as implementation of Casper/proof-of-stake. Only the Ether reward will change, dropping to 3 Ether per block.
The Metropolis hard fork will make several desirable changes to the network, and prepare Ethereum for the final stage on its road map – the fourth and final hard fork, Serenity, which is current without a projected time-fame. Serenity will bring about the final major improvements to the network, as well as Casper/proof-of-stake implementation, which is likely to cause a significant rise in the exchange value of Ether. Conversely, the decrease in mining reward included in the Metropolis fork will probably decrease Ether’s price. Yet, the network improvements are likely to bring in many new years, as well as increase consumer and enterprise confidence in the network. Therefore, while the effect that the Metropolis fork will have on the market is uncertain, this upgrade will prepare the Ethereum network for a long, fruitful, and busy life.
It is worth noting that last time the Ethereum network underwent a protocol upgrade from Frontier to Homestead, <a>its value rose 430% in the 35 days from announcement to implementation. The market looks much more crowded, and the peaks are far loftier, but we’re certain that Ethereum will follow a similar pattern as the end of September arrives.
Note: The Ethereum hard-fork is a planned fork of the network, meaning that the Metropolis upgrade is not a split chain, such as Bitcoin Cash or Ethereum Classic. There will be no new currency. The Metropolis upgrade is miner-backed; miners on the current Ethereum blockchain will upgrade to the new Metropolis chain and desert the old one.