Ethereum joined the wave of cryptocurrencies with increasing valuations by hitting an all-time high of $522 as of today. Data reflects a 8.74% appreciation over the course of 24 hours. What is the cause behind this rise? Well, the entire market capitalization for cryptocurrencies is at a high of roughly $300 billion. While Bitcoin has a controlling stake on this figure, Ether is one of the most popular digital currencies after it.
One reason Ethereum is growing is because of Metropolis, the third stage in the cryptocurrencies’ 4-stage process. Some of the planned updates include Zk-Snarks, Proof of Stake, improvements to smart contracts and account abstraction. Smart contracts already make Ethereum unique from Bitcoin in that the blockchain’s hosting capabilities allow for application development. These new updates should help incentivize further use of the alternative currency, particularly if Bitcoin is truly in a bubble soon to burst.
Zk-Snarks stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.” It is based on the principle of zero knowledge, which entails proving you possess a specific knowledge without divulging what that knowledge is. This is obviously a vague concept, but it is a malleable one and applies specifically to Ether smart contracts. Smart contracts involve completing a task for a predetermined amount of funds. Regarding Ether smart contracts, Zk-Snarks prove that a task has been completed without identifying the actual steps. This is important for maintaining anonymity, whether on a personal or corporate level, on the blockchain.
Proof of stake ties into the mining process. In cryptocurrencies, there is proof of work v. proof of stake. The former involves miners mining cryptocurrencies via solving puzzles using expensive hardware. The latter virtualizes the concept of mining through validators. In the case of Ether, validators would stake a portion of their own Ether and begin validating blocks they believe should be added to the blockchain. If a selected block is approved, the validator is rewarded the same amount of Ether they wagered. If it is not, the validator loses their Ether. Proof of Stake carries multiple advantages, including lowering the cost of mining, prevents miners from controlling the market, prevents bad blocks from entering the blockchain, increases block creation and more. The only potential issue with implementing Proof of Stake is generating a separate cryptocurrency as a result of a hard fork (think Ethereum and Ethereum Classic).
Smart contracts run on 2 elements—gas and Ether. “Gas” is the computer power behind a contract’s execution and Ether is the money used to pay for the gas. During a smart contract, going back to a previous step requires a certain amount of gas, which means it requires money. Cancelling a smart contract requires even more. Metropolis aims to fix this by assisting contracts reverting to previous stages without using as much gas. All unused gas will be returned to the person or entity that created the contract.
The last component of Metropolis is Account Abstraction. The goal is to blend the “front-end” part of Ethereum (people’s Ether wallets) and the “back-end” (smart contract code present in the blockchain). This combination would allow users to better protect their accounts from malicious attacks from quantum computing and so forth.
Ethereum will continue to grow past Metropolis. The value will also increase in accordance with Bitcoin, as cryptocurrencies are gaining traction in the global markets. This could position the cryptocurrency to earn a larger presence in the online gambling market. Currently Ethereum gambling sites are not nearly as plentiful as Bitcoin gambling sites are. Ethereum is far behind Bitcoin, but is has enough unique qualities to promote its longevity.