The news today in crypto is all about the decision to delay the Ethereum ( ETH-USD ) Constantinople upgrade — scheduled for today. The upgrade has been discussed for nearly a year and introduces a hard fork on the Etheruem chain with new features to make scaling the network easier and start the path to less reliance on ETH mining.
But we’re not there yet. The update was delayed due to the finding of a security flaw that could have exposed the blockchain to a dangerous vulnerability.
It’s simply too risky to release an upgrade with any kind of security risk. We’ve seen too many exchanges and coins hacked for Ethereum to roll something out just to hit a deadline. So the Constantinople delay, while slightly discouraging, is the right move. And the market responded with confidence, seeing a flat day for ETH prices.
The focus has to continue to be the technology. At least for the core Ethereum developers. Let the other app owners figure out user acquisition and engagement. At this point, the number of Etheruem apps continues to grow — and grow with acceleration. This is a positive sign for the Ethereum technology and confidence in it to build on top of. But is it translating to the kind of use that increases the value of the ETH token?
As we see, ETH transactions remained mostly flat through a good portion of 2018, but are still at a healthy increase from the beginning of 2017.
Josh Stark in his ‘ Year In Ethereum ‘ article makes a few salient posts about looking at Ethereum in 2018. Here’s what he had to say about using items like daily transactions as a measuring instrument.
Is “daily active on-chain transactions” the right measurement to quantify user adoption? This year, people started thinking (and tweeting ) about what metrics we should use to gauge Ethereum’s success.
The answer, surely, is that it depends on what counts as success. Some businesses require large numbers of users (like consumer apps or games), while others seek high volumes of value (like some financial services).
As layer 2 scaling technologies are adopted, more user activity will move “off-chain” where it is more difficult to measure. This already influences the data used to measure Ethereum’s adoption.
But this isn’t a bug, it’s a feature. We want to build web 3 — an Internet that, among other things, respects user’s privacy instead of spying on them. That means giving users the option to keep their business to themselves, off-chain, where it isn’t easy to measure and incorporate into statistics.
He also legitimizes a year in which ETH values went as high as $1,500 and now sit near $130. The year, as he calls it, was for building and developing tools.
Developer tools improved, new security tools were released, key frameworks were released, and hackathons became a fixture in the community. In 2018, the vision of average developers being able to build something useful on Ethereum became a reality, and the tooling necessary to use smart contracts in production improved.
Stark shows the graph of downloads for Truffle — a set of Ethereum developer tools. This shows an incredibly healthy growth, backing up claims that Ethereum’s community of tech minds continues to grow and look for ways to use this disruptive tech.
This all seems to be paying off, both inside Ethereum as it prepares for the Constantinople hard fork — one of the biggest upgrades to the Ethereum chain in its history. Moreover, it’s showing that dapps themselves are starting to find more mainstream use.
Augur ( REP-USD ), a promising application on the Ethereum chain, has been slowed by both the difficulty of signing up (having to download the entire Augur blockchain) and the semantics of betting questions (without a centralized authority, the interpretation of bets is open). Still, despite this, REP tokens are up 50% over the last week and spin-off Veil has just launched which lets investors trade off of Augur with Ethereum. The ease-of-use here, for those outside the United States, is a huge upgrade, showing how easily innovation can put useful products on the Ethereum chain.
The Constantinople upgrade will come back and likely soon. It may not have an enormous effect on ETH prices. Many investors are still looking at charts like daily transactions shown above to see the value of ETH as a financial asset. Others are looking toward the applications — if one can show the beginnings of growth and profitability, it will likely trickle through the rest of the network.
The dream is for a new version of the web — a long goal for the Ethereum community.
If it succeeds, it could be the kind of social disruption that moves us away from centralized companies making billions on user data. To achieve something on that scale, small delays that focus on the tech have to be not just tolerated, but also encouraged.
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Disclosure: I am/we are long ETH-USD. I wrote this article myself, and it expresses my own opinions.
I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article..
