As the network upon which ICOs and smart contracts are built, Ethereum represents one of the truly useful parts of the crypto space. It is also the world’s second-largest cryptocurrency.

But it has faced significant scaling issues as it has become more popular.

A new hard fork is set to change all that. On 30 October 2018, Constantinople is due to be implemented across the network. But what does this actually mean?

EDIT: October 25th Update - Hard fork is postponed until 2019

A hard fork

System-wide upgrades are known as a “hard fork” and are backwards-incompatible. This is basically a change to the underlying code that is large enough that it requires all nodes that form part of the network to update their software or be excluded from mining the cryptocurrency.

A good example of a hard fork is Bitcoin Cash, which was created from its parent coin Bitcoin in August 2017. The new consensus rules implemented by Bitcoin Cash included increasing the maximum possible block size from 8MB to 32MB, ostensibly allowing far more transactions to be processed than are possible with Bitcoin. Ethereum underwent its own rule change or hard fork in 2016. Ethereum Classic is the original blockchain which remained when the hard fork took effect.

Hard forks are inherently risky and disruptive. Making alterations to a code base threatens to alienate core developers who don’t agree with the changes, leaving the cryptocurrency less stable and less well-supported than it was before the switch. Certain specific modifications - such as the drop in block rewards discussed below - could put pressure on Ethereum miners to switch to more profitable enterprises.

The changes should in theory take place immediately, once developers have agreed the time of the switch at the end of October 2018. Before then, Constantinople will be trialled on Ropsten, a testnet designed to mimic the exact conditions on the Ethereum network. This pilot will begin on October 9th and everyone will be watching very closely to see how Constantinople performs.

Constantinople = Upgrade

Ethereum’s core developers have been working on an upgrade to the way Ethereum’s infrastructure works. This system-wide change is intended to improve efficiency, increase scalability and optimise the network.

One obvious example of Ethereum’s scaling issues was highlighted with the popularity of an Ethereum app called Cryptokitties.

In the game, collectable Tamagotchi-like digital pets are generated by code, and you can breed new cartoon kittens by spending ETH on smart contracts.

But the game became so popular throughout 2017 that it caused significant congestion on the network, drastically slowing down the rate at which all other transactions on Ethereum could be verified. By December 2017, Cryptokitties was using up 20 percent of all computation on the network. Clearly, this impacted heavily on the perception of Ethereum as a stable, future-proofed system.

What the devs say

A system-wide upgrade, as anyone who has worked in IT will know, is no mean feat. Developers will have to overcome difficulties with co-ordination and ensure that the new code works as smoothly as possible.

A filmed meeting of Ethereum’s core dev team on 31 August provided more information on how Constantinople might be implemented.

Block reward reduction

Miners will get a reduced reward for validating blocks of transactions from 3 ETH to 2 ETH per block.

Delaying the ‘difficulty bomb’

A mathematical problem known as the ‘difficulty bomb’ was originally added to the Ethereum

Network to bring a shift from a Proof of Work (POW) algorithm to a Proof of Stake (POS) algorithm. Under current rules, this is set to reactivate in early 2019.

Learn more about PoW and PoS in our deep-dive here.

EIPs

Ethereum Improvement Proposals are intended to improve the functionality of the network and how fast it can scale up when millions of new transactions are added.

Ethereum’s core team have agreed that five major EIPs will be put in place for Constantinople:

1. EIP 1283 -

   Improves the efficiency of refund calculations

2. EIP 145

   - Increases the speed of calculations in the Ethereum Virtual Machine

3. EIP 1052

   - Compresses how smart contracts interact with one another

4. EIP 1014 -

   Makes it possible to add state channels to the Ethereum blockchain

5. EIP 1234 -

   Delays difficulty bomb for 12 months, reduces block rewards from 3 ETH to 2ETH

Each of the five EIPs seek to achieve improvements in the Ethereum network in terms of scalability, flexibility and how quickly contracts are verified. EIP 1234 is the most controversial because it makes Ethereum mining less profitable. Miners have complained that they may move on to other support the blockchains of rival cryptocurrencies if their incentives to mine are reduced in this way.

Constantinople benefits

Constantinople, along with other proposed upgrades like sharding and Plasma, is designed to improve the speed and the reliability of the network to scale in a cost-effective way.

Implementing Constantinople should lead to lower transaction fees and a faster network that is able to cope if millions more transactions are added to Ethereum in future.

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EDIT: Update 25th October - Hard fork postponed until 2019

A hard fork of Ethereum which was supposed to cut costs, speed up transactions and add millions more smart contracts to the blockchain has been delayed until 2019.

Ethereum’s core development team have been working for months on Constantinople, a system-wide upgrade to the base code.

But an October 13th trial on the Ropsten test network threw up several security flaws in EIP 1014.

This upgrade was one of five agreed by Ethereum’s devs and would have allowed the addition of state channels to the blockchain.

State channels can help lower costs and reduce latency by taking transactions off chain, freeing up computing power and improving the rate at which miners can verify smart contracts and transactions.

The power of Ethereum lies in its huge community of open source developers, 990 in total, who have made over 1.2 million code additions in the past seven days.

For comparison, Bitcoin has 170 developers with 4,000 code changes in the last week, and Bitcoin Cash has 26 devs who have made just nine additions in the same period.

But structural progress is slow with Ethereum’s larger team in constant debate.

A tentative release date for Constantinople has now been set for January or February next year.