Cryptominer Pushback Suggests Ethereum Offshoot Is Coming

Cryptominer Pushback Suggests Ethereum Offshoot Is Coming


4 minutes

17:56 today

Open source blockchains are expected to undergo a major software upgrade in which the network uses more energy efficient validators.

Open source blockchains are expected to undergo a major software upgrade in which the network uses more energy efficient validators.

Ethereum is an open source blockchain

Photo credit: Shutterstock

A monkey wrench is about to be thrown into the already complex transition that the Ethereum blockchain will soon go through.

Ethereum will receive a major software upgrade called Merge as early as September. This moves the network from using a large number of computers, commonly called miners, to more energy-efficient validators for ordering transactions. Not everyone is attuned to change. A growing number of factions are planning forks that copy the current software, and with some tweaks, essentially continue to run older versions of Ethereum using miners.

One initiative, called EthereumPOW, is spearheaded by Hongcai “Chandler” Guo, a former large-scale Ethereum miner in China who is now semi-retired and living near San Francisco. He said that several Chinese companies that make ethereum mining equipment (which would be made nearly obsolete by the merger) asked him to start working on the fork.

If the blockchain is forked, “everyone will get the money for free,” when existing Ethereum holders receive new tokens, Guo said in an interview. “Everyone will be happy.”

Forks have been mainstays of the cryptocurrency world since Bitcoin’s debut over a decade ago, as factions battled for direction and control of various blockchains. All have been spun off with varying degrees of success. There is already Ethereum Classic, which forked from Ethereum in 2016.

Analysts see many hurdles. Newly forked chains often lack support from app developers, promoters, and users, and often don’t even have explorer tools to track usage or lack thereof.

“Most of the discussions about PoW forks of Ethereum have been relatively short-sighted,” said Aidan Mott, Intel manager at research firm Messari, which focuses on new tokens. “However, meaningful planning and research to support the ongoing logistics of the new network is very light.”

Speaking at the Bidl Asia 2022 conference in Seoul, South Korea this week, Ethereum co-founder Vitalik Buterin said the fork effort brings little value, saying it offers little differentiation from existing blockchains. I dismissed it as no.

“I don’t think Ethereum will really get hit hard by another fork,” Buterin said during Saturday’s webinar. They fully support the Proof of Stake initiative and the ecosystem is very united around it.”

Still, Guo says he has a team of 60 developers working on the fork, and has unleashed the ominous-sounding difficulty bomb, a software feature designed to force migration to a new validator-based system. I said that existing software would need to be tweaked to get rid of it. It is called Proof of Stake (PoS) from the current Proof of Work (PoW).

There seems to be some debate about how to proceed. Hedge fund Galore Capital is predicting a fork, but Guo said it had not yet communicated. Crypto entrepreneur Justin Sun’s Poloniex exchange will support all forked proof-of-work Ethereum tokens, Sun said in a message to Bloomberg. Sun has created its own blockchain, Tron, which already uses Proof of Stake.

“Proof of work is essential for Ethereum,” Sun said. “PoS smart platform he has Tron.”

Miners may simply support forks as a way to continue. After the merger, they face the choice of moving to support smaller chains like his Ethereum Classic, repurposing gear, or even selling the machine. Hive Blockchain Technologies Ltd. said Friday that it will consider switching to Ethereum Classic mining.

Chris Kyle of Flexpool, who has helped many small miners support Ethereum, said: He notes that he hasn’t seen a strong proposal yet, but that doesn’t mean the fork won’t take off, he said.

“One thing I do note is that cryptography tends to be pretty illogical,” said Kyle. “Many networks/coins have little real value and are all speculation. So a successful fork will probably need someone/something famous behind it.

Many companies may take a wait-and-see approach. In 2016, MetaMask Crypto was spearheading work on MyEtherWallet, where his lead, Taylor Monahan, said he would not initially support the Ethereum Classic fork. The company quickly changed its mind.

“I would never say today given everything that happened at the time,” Monahan said, adding that MetaMask should consider whether to support another forked token. If there’s an opportunity for someone to make a lot of money, it’s probably going to happen.”

©2022 Bloomberg LP Cryptominer Pushback Suggests Ethereum Offshoot Is Coming

Back to top button