Recent years, the excitement around cryptocurrency has begun to subside. Among the thousands of different representatives of the world of virtual currencies, two giants stood out, firmly occupying most of the market and causing the most trust among users. We are talking about Bitcoin and his younger brother — Ethereum.
Bitcoin takes its place as an original and unique product of its time. From the point of view of the layman, the concepts of «bitcoin» and «cryptocurrency» are inseparable, to the extent that people may not know other currencies. The situation with Ethereum is more complicated. Bitcoin error correction, the entire system of smart contracts, on the basis of which more and more new investments have already been collected, new projects are being launched and launched, all of which cause a reasonable interest in the Ethereum currency itself. Against the background of such popularity, the idea that someone can finally shift Bitcoin from the leading positions did not look like a joke.
Great Cryptoboom
The year 2018 has come with the fall of the market. Inflated by speculation and hype among enthusiastic users, the cryptocurrency bubble burst, like its ancestors’ burst — the building bubble of Japan, which destroyed the economy of the whole country for decades, and the famous dot com bubble, which led to a complete change of the information world landscape.
The world media has already begun with pleasure to gut a long-awaited catastrophe, but such corrections are not something new and apocalyptic in the financial market. There will be ups and downs, an optimistic scenario is possible, even if the path to it will not be easy.
However, even with this rule in mind, Ethereum collapsed deeper than all predictions and forecasts. Is this some kind of failure, a mistake in the idea? Or is it just coming to a new reality? And most importantly — can such a dive be fatal, squeezing the community for other options?
ICO disease
As in the case of any bubble, after the market collapses, investors discover that they have invested in an incomprehensible, unnecessary, or inoperative product. It is no longer possible to obtain sales growth due to the mere use of the word “blockchain” in the company’s description. The “free” money ran out, and with their departure, people began to read contracts, study the topic, and discover exactly what they were in.
In a sense, the gold rush of crypto investments is still ongoing — in 2018, growth in investments in ICO projects paradoxically continued despite the collapse of the market. Nevertheless, there was a steady trend for work only with a regulated (for example, through SAFT) market sector.
The arrival of regulations was inevitable, even if it contradicts the very ideas of crypto-anarchism. As it turned out, governments still cannot control the state — numerous speculations and pyramid-like structures in the crypto-world have finally attracted the attention of states around the real world. The first signs were ultimatums from the Chinese and South Korean authorities, which put crypto-anarchists before a difficult choice — regulation or a complete ban.
Following the Asians, the US Securities and Exchange Commission followed, sending out notifications to dozens of companies and investors in the ICO industry, making it clear to the state any tokens are securities.
At the time of crypto-fever, few people bothered to speculate on whether to contact informal securities, the issuance, and distribution of which in some countries is a criminal offense. Tasty jumps on stock charts dazzled even the most cautious.
Now, in the cold atmosphere of massive collapse, many investors suddenly discover that tokens and smart contracts are in principle not needed by their business or tasks, and work with tokens has suddenly fallen into the gray zone from the point of view of the law. As a result, what was originally the basis for interest in Ethereum, now became the reason for its fall — the collapse of the network of startups dragged the currency itself.
Reputation blow
Ethereum suffered from numerous speculations and discussions, with pleasure exaggerated by the media. Many of the attacks of critics or statements by state regulators are not justified afterward, but each such episode leaves a mark on the reputation, causing investors anxiety.
Does not help the currency and excessive fame of its creator — the Vitaly Buterin. Its fame and influence on the development of not only affect the exchange rate directly but also cause concern to the community due to excessive centralization — a «sin» in the crypto world.
Despite the fact that the activation of the hard fork Constantinople in the Ethereum network was postponed by the developers several hours before the appointed date, the blockchain division nevertheless took place. As Michael Hahn from MyCrypto explained, not all miners were able to postpone the update — and about 10% of them moved to the new network. The volume of their computing power today is twice as high as that of Ethereum Classic, with a thousand blocks behind the main network. Problems were also found in those who updated the nodes on time.
Recall that hard fork Constantinople was at the last moment officially postponed indefinitely due to a detected vulnerability in improving the EIP-1283. However, as Sergio Demian Lerner, a crypto-security consultant, said, it has actually been known for several months already, so he and his team never thought that the Ethereum developers were unaware of the problem. Activation of the second part of the Metropolis hard fork was scheduled for October at block No. 42230000, but the miners sabotaged the activation of Constantinople in the Ropsten test network — and they moved it first for a few days, then for November and eventually decided to postpone to mid-January.
The Ethereum Foundation announced a grant of $ 5 million for the British company Parity Technologies, Ethereum representatives said in their blog on January 7. As far as is known, the grant is intended to increase scalability, usability, and security. All funds will be used to develop Casper, sharding, QA, auditing and infrastructure improvements.
Result
The future of Ethereum, though misty (like most cryptocurrencies at the moment), but inspires confidence. And this is despite the fact that hard fork is postponed, and investor confidence is declining.