19:09 11.09.2019

Key Ethereum Blockchain Issues and Basic Information About Istanbul Hard Fork 

The brainchild of Vitalik Buterin has taken second place in the global ranking of cryptocurrencies for many years in a row, but recently media often writes that Ethereum has many problems that the development team can not solve. In this article, we will talk about the main problems of the project, its competitors and, of course, discuss the upcoming hard fork, which should take place very soon. So, first things first.

A little history and the role of Ethereum in the industry

The concept of Ethereum was proposed by the founder of Bitcoin Magazine Vitalik Buterin at the end of 2013, and the network was launched on July 30, 2015. Ethereum is a platform for creating decentralized projects based on blockchain technology. Along with this project, such a concept as smart contracts appeared.

The project brought significant benefits to the entire cryptocurrency industry. Thanks to it tokens began to appear in large quantities, which allowed the introduction of blockchain technology in almost all areas of life.

However, Ethereum is still the largest known platform for creating blockchain applications. It has the largest user base and a huge community of developers and also has years of experience. In particular, hundreds of thousands of coins have already been issued on this platform. There are also many tokens standards under development, for example, used for the security assets ERC-1400 and ERC-1410, which are used by many projects, for example, Securitize and Polymath. In addition to the already existing dozens of standards, there are many suggestions for improving Ethereum. They offer various customizable features: interchangeability, release and burning options, and coin transfer restrictions.

But despite all the above, there is a significant decrease in demand for the service of the "world computer". If at the peak in early 2018, ETH rose above the $1,300 mark, then at the time of writing this article, it is trading at around $180. The price drawdown in relation to the historical maximum is almost 90%, which only confirms this conclusion.

Competing with the not enough scalable Ethereum, other blockchains also support their own token standards. Among them: EOS, Ontology, Tron and even Bitcoin Cash, which uses the second-level solution Simple Ledger Protocol.

The main criteria for the blockchains attractiveness

  • The presence of dApps and a variety of use cases. The number of applications in the blockchain affects its value.
  • Transaction rate. The higher the blockchain bandwidth, the more interesting it is for developers. 
  • Commissions. The lower the transaction costs, as well as the cost of issuing new tokens, the more users will want to interact with the blockchain.
  • Easy to create. Elements such as test networks, EVM compatibility, and smart contract languages ​​play an important role in attracting users.
  • Security and development. Total activity, expressed by the number of improvement proposals and the number of active developers, is a sign of the project’s well being. In addition, blockchain security plays a key role.
  • Decentralization. The degree of centralization affects the value proposition of the chain, especially from the point of view of potentially interested parties.

All of the above aspects are extremely important for new developers and investors when choosing a project.

Main Ethereum restrictions

At the moment, the main problem with Etherium is scalability at a basic level. This leads to a number of problems, firstly, to the fact that transactions are slow, and secondly, the cost of "gas" rises, and sometimes reaches $0.30.

Gas is transaction fees.

On the one hand, this can be interpreted as one of the signs of the popularity of the Etherium blockchain, but it also indicates that the project has scaling problems that lead development to deadlock.

We all remember fabulous promises of developers of ICO projects in 2017, who used Ethereum as a tool to raise funds. Unfortunately, the vast majority of promises remained only in WP of these startups. Of course, there are many reasons for the failure of the ICO: the lack of professionalism of the development teams, fraud, other factors, and also problems with the scaling of Ethereum, which did not allow some teams to implement their plans.

However, the relatively slow and inefficient Ethereum is still regarded as a universal blockchain, which makes it possible to create almost everything. New, more specialized solutions are starting to appear on other networks. For example, TRON with its high bandwidth is ideal for the gaming industry, and the Binance Chain is often used to create trading platforms.

When to wait for Istanbul hard fork?

The development team wants to solve all of the above problems with the upcoming hard fork called Istanbul. This fork will consist of two stages. The first, most likely, will happen on October 16, 2019, but since the developers have already repeatedly postponed the previous forks, we cannot be sure that October 16 is the final date. The main point of this stage is to improve confidentiality, as well as scalability, and after that, the Ethereum network will be able to provide more transactions. It is also planned to reduce the cost of gas, which will make the Ethereum blockchain more competitive.

The first part of Istanbul will be the eighth hard fork in the Ethereum network. It is expected that it will expand the possibilities of interaction with the Zcash cryptocurrency, help protect the network from replay attacks, and will also contain other important updates.

Another proposition (EIP 1702), created by Parity Technologies developer Wei Tang, intends to optimize smart contract updates. It also involves the introduction of a new methodology for hard forks - “account versioning” which simplifies the process of updating or launching a new virtual machine.

According to Justin Drake, one of the Ethereum developers, the zero phase of Ethereum's transition to stage 2.0 will be launched on January 3, 2020, this will be the second phase of the Istanbul hard fork. This time, the development team is seriously determined to catch up to this date, since Vitalik Buterin wants to coincide with this event on the 11th anniversary of the Bitcoin block genesis. Why is it so important to us and what fundamental changes will it bring?

The main changes in the Istanbul hard fork

The main innovation will be the long-awaited transition of the coin from the PoW protocol to PoS. A whole "global computer" is expected from Ethereum 2.0, which should appear as a result of updates to the Serenity network. It should be a decentralized blockchain platform that will support thousands of transactions per second, and their processing will be cheap and will not require large expenses for electricity.

Initially, Buterin planned a smoother transition and wanted to do everything in stages, first of all, to switch to hybrid mining using the Casper protocol.

The Casper protocol implies that some of the blocks are mined through PoW mining, and the other - using PoS.

After that, it was planned to implement a full-fledged PoS and only then start scaling using sharding technology. But the plans have changed and at the moment, the development of Casper and Sharding technologies is going at the same time, and the one that will be completed earlier - will be introduced into the network.

The core of sharding is to create a huge number of parallel blockchains that independently process transactions, but at the same time are connected by a common network, as well as the history of operations. The main difficulty is to make the network both secure, scalable and decentralized. The problem is that to improve one component, you must sacrifice another. For example, it happened with EOS, which sacrificed decentralization for the benefit of fast and cheap transactions. But Buterin is very serious and he wants all at once.

Previously, the developers planned to set a limit for those who want to become a validator at 1500 ETH, but then they decided to expand the decentralization component and allow mining to every network member who has at least 32 ETH in their wallet.


If nothing changes, then this will happen at the very beginning of next year. At the time of writing this article, it is not much mentioned in the media, but everything will change closer to the announced dates, as was with the case of Litecoin halving or Ethereum Constantinople hard fork. If the team of Vitalik Buterin succeeds in implementing his plan, then this will most likely cause a violent reaction in the cryptocurrency market.

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