State of the Blockchain: Ethereum gears up for upgrade as bitcoin hits all-time high

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Bitcoin is breaking expectations once again as it rocketed past its previous all-time high (US$5,000) to reach beyond US$5,700 today. The last time bitcoin moved toward this limit was on September 2 this year when it failed to sustain the bullish momentum. The price of bitcoin fell back to about just above US$4,500 before the day ended.

Bull run for bitcoin

The reason for this bullish run is the proposed Bitcoin Gold and SegWit2x forks, which are happening later this month. While there was uncertainty the last time such a fork happened for Bitcoin Cash, investors seem to be more opportunistic this time around.

There are telltale signs that investors are selling altcoins for bitcoin in order to receive Bitcoin Gold via the fork. The price of bitcoin has risen by at least 18 percent month-to-date. The value of altcoins, on the other hand, have been falling proportionately over the same period—OmiseGO and NEO have taken an 18 percent and 16.8 percent fall in prices, respectively. The bitcoin dominance, which measures the market cap of bitcoin against the market cap of the rest of the market, has also risen from 48.8 percent to about 53.2 percent, according to data from Coinmarketcap.

Whether bitcoin’s bull run will be sustained beyond the fork remains to be seen. It’s highly likely that investors will sell their bitcoin and Bitcoin Gold after the fork to buy back their positions on altcoins at the current reduced price, cooling the demand for the former.

Ether gathering momentum

Ether has been trading sideways since the start of the month, recording a mere 2 percent rise in price. Recent news on government regulations and intervention on ICOs have had an effect on its demand.

While more governments and central banks are devising policies to regulate token sales, investors and speculators are getting excited about the imminent Byzantium hard fork, most likely to be implemented on Monday, October 16.

Part of a larger upgrade named “Metropolis,” the Byzantium hard fork will introduce nine key Ethereum improvement protocols that will enable the Ethereum network to run lighter and faster and enhance its transaction speed and security.

The Ethereum development team is working with the team behind privacy-focused cryptocurrency Zcash to implement a proprietary encryption technology named zk-SNARK, which will make transactions anonymous and give network users more privacy. The first transaction using this technology went through successfully on the Byzantium Testnet last month.

Apart from increasing transaction anonymity, the Metropolis upgrade will eventually implement the proof-of-stake protocol from the current proof-of-work protocol using the Casper consensus algorithm. This includes benefits like improved scalability and network security, among others. The upgrade will also increase the robustness and flexibility of smart contracts.

Ethereum revolution?

Privacy, anonymity, network scalability, and security are some of the factors that are making investors and supporters excited about the future of Ethereum. This could be where Ethereum stops being a mere theory or fundraising medium for shady blockchain businesses, as the move will promote Ethereum as a viable and attractive option for enterprise-level adoption. According to Zcash founder Zooko Wilcox, privacy is the main issue holding blockchain technology back.

Matthew Leising from Bloomberg explains that the ability to provide immutability, security, and anonymity will likely garner the attention of banks and financial institutions:

“This could be the moment Wall Street’s blockchain champions have been waiting for. Its ability to reshape vital financial market functions like clearing and settlement has always hinged on whether banks can keep customer and proprietary data secret. Zero-knowledge proofs, a theoretical possibility for decades, are now a reality, letting transactions be verified without the need to share any of the underlying data.”

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