On April 1, miners have scheduled the protest against the Ethereum update.
Miners want to prevent the introduction of a new system for calculating commissions when part of the reward will be burned. To force the Ethereum team to abandon these plans, the miners are planning to carry out a 51% attack by pooling their computing power in a single pool. This is a serious threat, and since its announcement, ETH quotes have been declining. However, analysts do not believe that Vitalik Buterin and his team will give up and cancel the update.
A 51% attack disrupts the decentralization of the network and allows the attacker to decide which transactions to carry out and which not. For a solid platform like Ethereum, this is unacceptable. It is in order to ensure complete decentralization that Ethereum 2.0 is being created with a transition from Proof-of-Work to Proof-of-Stake consensus. At the same time, Buterin promised that the current blockchain will remain as part of Ethereum 2.0 as a side chain, and miners will have the possibility to earn money, but according to new rules.
The analysts believe that the 51% attack will not last long even if it will be done. The Ethereum team has a tool of a powerful impact on the miners. Developers can make the calculation algorithm more complex, and miners will suffer big losses. Therefore, in the long term, the prospects for ETH are very good. Projects on the Ethereum platform will develop better if fees decrease. First of all, this applies to decentralized finance (DeFi) and NFT (non-fungible token) technology, which is becoming very popular among influencers and celebrities. NFT can be used for copyright protection and proof of ownership.
The transition to Proof-of-Stake and the creation of Ethereum 2.0 is going well, according to Vitalik Buterin. There is 3.6 million ETH (about $6.5 billion) already frozen on the ETH 2.0 smart contract. These funds cannot be withdrawn until the transition to phase 1.5, which will most likely be reached in 2022. It is then that Ethereum can soar and surpass the first cryptocurrency in terms of capitalization.
Now the difference is still impressive. ETH capitalization is slightly more than 20% of BTC capitalization. It is hard to believe that such a gap can be closed in a year. However, analysts offer a strong case. In particular, crypto trader Tyler Swope speculates that an Ethereum hard fork could occur, modeled on what happened to Bitcoin in 2017 when Bitcoin Cash (BCH) split from it. Later, Bitcoin Satoshi Vision (BSV) also appeared.
As a result of the hard fork, ETH hodlers will receive the right to get tokens in the new chain in a 1: 1 ratio, that is, the number of tokens will double. This immediately doubles the capitalization. And if to continue the comparison with Bitcoin, then BCH, for example, showed a powerful rise for several months after the hard fork. The Ethereum hard fork may occur due to the miners’ protests.