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Ethereum, the second-largest cryptocurrency in the world, is set to have an excellent year in 2024, according to estimations and predictions made by most investors and analysts. Binance data shows that the coin has steadily grown throughout 2023 despite the frequent setbacks. However, 2024 won’t be all smooth sailing either, and shifts in the market are still anticipated. Investors must remember to be vigilant this year, too, in order to protect their portfolios and assets and ensure they see more revenue than losses.
Ethereum’s design
Ethereum is something of an enfant terrible of the crypto space since its blockchain is not merely a means to buy, sell, and trade crypto coins. In fact, the Ethereum ecosystem has been different right from the moment it was launched and has been a forerunner of the decentralized applications and finance landscapes. Its innovations have been hailed as possible game-changers for their ability to shift paradigms in traditional systems and perhaps make them more efficient and accessible.
However, there will still be some time until the system is perfect and can be integrated into other processes as well. That’s because the blockchain is a relative newcomer to the financial market and, therefore, still developing. At the end of December, Vitalik Buterin, one of the Ethereum co-founders, shared the roadmap Ethereum will follow in 2024. Compared to the previous year, the changes will be minor because ETH has taken gradual steps toward growth for quite some time now.
The blockchain is famous for its dedication to innovation, launching upgrades frequently with the aim of making the network easier to navigate. The blockchain will continue to focus on the native coin, but six other elements will also be elaborated.
Main components
The adjustments that must be completed throughout this year are relatively small, but the blockchain plans to continue developments going ahead. The six sections set to be expanded in the future are:
- The Merge: Its main goal is to have a robust and straightforward proof-of-stake system that is entirely decentralized.
- The Surge: The aim of this upgrade is to achieve at least 100,000 transactions per second and improve cross-rollup standards.
- The Scourge: Centralization concerns are a serious problem in the crypto space, and the Ethereum blockchain seeks to solve the ones threatening it through the Scourge, especially around the areas of pooling and liquid staking.
- The Verge: This upgrade should make block verification an uncomplicated endeavor through the simple performance of a few basic computations and the SNARK, the system through which transactions are wholly encrypted but still validated using the consensus rules of the network.
- The Purge: This update will include protocol simplification and aims to eliminate all technical debt. The costs of participating in the network will be changed through old history clearance.
- The Splurge: Since crypto spaces are unpredictable, and it’s challenging to say with absolute certainty how an environment will develop, it’s important to keep options open and ensure all loose ends can be remedied. That’s where the Splurge will come in to fix everything else that the previous upgrades might have overlooked or rectify any issues they might have created.
Proof of stake
The mining process can be quite intensive and uses a lot of power, which has created a case against cryptocurrencies, particularly among climate activists. It is true that traditional systems can put quite a lot of strain on the already overworked power grids, potentially leading to catastrophic blackouts that cause serious trouble among members of the general public. The shift Ethereum made from a proof-of-work consensus mechanism to a proof-of-stake is an essential step in the right direction, as it will drastically reduce the energy consumption the network is using at the moment.
Other blockchains have something to learn from Ethereum and should, in fact, look to make the switch themselves, or at least make a gradual move toward using renewable energy sources. Ethereum is also set to have developments in the SSF area or single-slot finality. The goal of this system is to ensure all blocks are final at the end of any single shot. It guarantees that blocks cannot be modified without burning about 33% of the staked coins. Right now, many users believe that the time it takes to reach finality has become too long.
It is inconvenient for some exchanges as well, as they have to wait to ensure that all the transactions are, in fact, permanent. These issues could be minimized or even entirely eliminated by reducing finality. In the post-Merge proof-of-stake system, new features must become solidified to ensure the easiest way to solve any current weaknesses.
Cypherpunk
Cypherpunk is a name for a group of individuals who believe the only way to protect personal data is to adopt privacy-enhancing technologies backed by strong cryptography. Recently, Buterin announced plans to return the blockchain to this original concept. The move comes in the context of increasing concerns regarding the ability of the blockchain to remain fully decentralized. As regulators and lawmakers are increasingly driven to integrate crypto into traditional finance systems, it goes without question that the systems will also have to change.
In its early days, Ethereum was envisioned and designed as a public shared drive that was completely decentralized. Its goal was to ensure peer-to-peer messaging and file storage, but its use cases expanded afterward to include crypto and other digital features. The turn toward financialization began in 2017, and since then, Ethereum has gone on a completely different path. Zero-knowledge proof, rollups, and second-generation privacy solutions are some of the features highlighted by Buterin, which he also says have become more mainstream in the years since.
To sum up, Ethereum is set to have a busy schedule this year, with many changes and modifications. While they are not exactly new, it’s important to remember that everything that changes in the crypto space does so for a reason and that every little thing can significantly impact the entire marketplace. As an investor, you should understand how changes within the blockchain can impact your capital.
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