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What is the Ethereum Ice Age?

 

The ethereum ice age is a codified difficulty adjustment, that was implemented as a failsafe, so as to ensure that the entire ethereum community, would be incentivized to accept new code modifications, that would allow for the functioning of a proof of stake consensus based algorithmic system. A hard-fork would need to be implemented for this purpose, in order for ethereum to move away from the currently in use, proof of work protocol. It was introduced on the 7th of September in 2015, almost 24 months ago, and was programmed to exponentially raise mining difficulty.

There have been numerous proposals and suggestions since then, aimed at reducing the risk of a potential freeze of the entire network. However, due to the consistency and ease at which ethereum hard-forks are implemented, it may not end up proving that much of a problem in the long run. The metropolis hard fork might resolve the whole issue, by delaying the difficulty bombEthereum classic has already solved the same conundrum, the ice age function was paused after the 3 millionth block. Although, it is a relatively simple concept, the present ice age/eth bomb confusion may be used by larger market participants for price manipulation, only time will tell whether this ends up being the case.

 

PoW Vs PoS

 

A blockchain that is propelled by proof of work relies primarily on miners, who are often tasked with solving complex computations. These problems have to be moderately difficult, for the added security of the whole network and all of the accompanying chain transactions, but need not be overly difficult, so that the actual work can be verified by all of the participating network stakeholders.

Proof of stake on the other hand, allows for the network to function by having blocks chosen in a deterministic (pseudo-random) way, participation in a reward requires a stake or allotment of tokens/crypto currency. The gain is either a percentage of the total stake, which is allocated over a fixed period of time (daily, hourly, etc) or a proportion of transaction fees is distributed.

Technically speaking, stakers are differentiated from miners by also being labeled as forgers. This is a more accurate term, since there really is no mining involved, it is more akin to figuratively minting/forging.

Unlike PoW, which requires a sizeable investment in mining equipment, PoS networks usually only need the actual crypto currency to be present. Profits are distributed according to holdings/balances, generally after an allotted time (commonly 30 days). This is done so as to further chain security, and stimulate long term holding, which is in turn, a necessary facet for reducing the dropout rates of stakers/network participants.

Peercoin was one of the first crypto assets to introduce proof of stake, and has since its inception, witnessed a plethora of clones, notably the user friendly Blackcoin, a direct descendant, at least as far as coding is concerned. There are other variations as well, such as NEM, which uses a proof-of-importance algorithm. Reddcoin has something similar, dubbed as proof-of-stake-velocity. Additionally, we also have BitShares, Clam, Lisk, Mintcoin, Novacoin, Qora and so on.

 

 

Ethereum Historical Charts (Hash Rates, Difficulty & More)

 

How will the ice age impact ethereum in the long run, and what is the long run frankly. A gambit of secondary and third party ICO’s have been realized since the original crowdsale, which was primarily started in order to raise fiat funds for 72 million eth. The supply now stands at 94,193,813.16 eth. The 22 million that have been created during that time, are of mining origin (also including ethereum from cloud mining contracts), from mined blocks and uncles.

From an after-ico starting price (find out what is an ico is) that oscillated around $1 for quite some time, ethereum has ballooned several hundred times, with the all-time high sitting just below $400. At the time of this writing, the current price is around $315. The total marketcap has also seen similar gains, starting from a low close to $90 million upon release, it recently rose up to a record breaking $36.48 billion on June 12th, which was just two months ago. We are only $6 billion shy of hitting that high once again. The blockchain is projecting strength and a considerable high level of resilience. Even though the overall number of transactions has increased significantly, pending transactions remain stable, and when compared to bitcoin, confirmation times are lightning fast. Unique address growth has yet to stop increasing as well, a probable sign that new user adoption is on the rise:

Eth daily supply growth shows no signs of waning; the same is true for the galloping mining hashrate, which can even be considered a bullish signal on its own. Mining difficulty is however slightly stalling, percentage wise at least, nominally it is increasing, albeit at a steadier rate. The discrepancy between the hash rate and mining difficulty might prove to be a problem down the road. The overall number of blocks has been persistently dropping, in line with increasing difficulty. Regardless, mined uncles have remained constant, despite everything.

The average block size has expanded in an almost parabolic fashion, with the average block time following suit, but at a much more decreased rate of growth. The average gas price is characterized by a stable price history; the average gas limit is in accordance with this. Total daily gas use on the contrary, is thriving, and momentum even appears to be intensifying. Gas is the internal pricing for running a transaction or contract on the ethereum blockchain.

Eth name service (ENS) registrations have dropped, though this does make sense, given how much euphoria was present before and after the release of the new system. Mining is still quite decentralized, below are the top 25 miners/pools by blocks and uncles:

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