Home / Archive / Ethereum Closes on $350, Demand Surges as Metropolis Hard Fork Nears

Ethereum Closes on $350, Demand Surges as Metropolis Hard Fork Nears

Last Updated March 4, 2021 4:58 PM
Joseph Young
Last Updated March 4, 2021 4:58 PM

Earlier this week, after the announcement of tech giant Microsoft to release its first Ethereum-based and privacy-focused blockchain framework Coco, the Ethereum foundation revealed its plan to execute a new hard fork named “Metropolis.”

Subsequent to the disclosure of the Ethereum foundation’s plan to execute the Metropolis hard fork by September, the price of Ethereum’s native token Ether surged from around $287 to $345 within a two-day span, as the market cap of Ethereum increased by $3 billion.

The daily trading volume of Ether also recorded a substantial increase, rising from $600 million to a staggering $2.2 billion. At the time of reporting, the daily trading volume of Ethereum is close to bitcoin’s $2.6 billion volume, the only cryptocurrency within the market to come near to bitcoin’s trading volume. Bitcoin Cash, the third largest cryptocurrency behind bitcoin and Ethereum, has recorded a $1.2 billion daily trading volume, almost less than half of Ethereum’s.

Unlike bitcoin, wherein most hard fork executions are contentious and likely lead to chain splits, the vast majority of Ethereum’s hard forks have been conducted to drastically improve the network’s security, flexibility and adaptability. In fact, except one hard fork led by the developers behind Ethereum Classic, all of Ethereum’s previous hard forks have been non-contentious hard forks supported by the community.

Hence, while imminence of hard fork executions in bitcoin normally leads to a decrease in the price of bitcoin due to the uncertainty in the market and decline in the confidence of investors, in Ethereum, hard forks are embraced as opportunistic updates to the existing Ethereum protocol. The community’s response to the Ethereum foundation’s Metropolis hard fork update has been evident in the price trend of Ether.

In an analytical blog post entitled “Hard Forks, Soft Forks, Defaults and Coercion,” Ethereum co-founder Vitalik Buterin explained that not all hard forks are contentious in nature. He further emphasized that hard forks allow cleaner and more thorough updates to a blockchain protocol than soft forks. He wrote :

“If I had to guess why, despite these arguments, soft forks are often billed as “less coercive” than hard forks, I would say that it is because it feels like a hard fork “forces” the user into installing a software update, whereas with a soft fork users do not “have” to do anything at all. However, this intuition is misguided: what matters is not whether or not individual users have to perform the simple bureaucratic step of clicking a “download” button, but rather whether or not the user is coerced into accepting a change in protocol rules that they would rather not accept.”

The newly introduced hard fork proposal of the Ethereum foundation is expected to provide four major benefits to developers, users and businesses in the Ethereum network. Through the adjustment of gas, integration of zk-SNARKs and masking or account abstraction, post-Metropolis Ethereum network is expected to be more private, efficient and flexible.

“In Metropolis the basis for the so-called zk-snarks is build. These “Zero Knowledge Proofs” will allow the Ethereum Blockchain to perform anonymous transactions on a higher level in the future. A proximity to Zcash is not surprising, as Ethereum chief developer Buterin and Wilcox work together on Zcash’s anonymity,” noted  Josh Breslauer.

Other factors that may be driving the Ethereum price and market cap upward could include an increase in demand towards Ether from South Korean bitcoin investors amidst November SegWit2x hard fork uncertainty.

Featured image from Shutterstock.