From ETH 1.X to Beacon Chain, check out everything that happened at Ethereum in 2019 and what to expect in 2020.
Ethereum is today one of the most significant and profitable cryptocurrencies on the market, behind only Bitcoin. Each year, this crypto has become increasingly popular and attracting the attention of investors attentive to the industry.
However, Ethereum is much more than just a cryptocurrency. In fact, we can say that there are two “versions” of it: the Ethereum project and the cryptocurrency Ethereum, or Ether (ETH).
The first version concerns a decentralized platform capable of executing smart contracts and decentralized applications (dapps) through Blockchain technology that is revolutionizing the global financial market.
The second version is the cryptocurrency used by this platform, to run smart contracts and computer services on the network and pay miners for validating transactions.
Last year, both ‘versions’ of Ethereum experienced good times and guaranteed gains and opportunities for many investors and organizations, despite moments of falling prices.
For this year that is just beginning, the question remains for many investors: what to expect from Ethereum in 2020?
In the following article, we have a recap of everything that happened in 2019 in the project and everything you can expect from it for the coming months.
What happened to Ethereum in 2019
2019 was a year of substantial progress for Ethereum, in which major updates to the protocol were introduced.
Both the platform and Ether have grown in economic terms and major technological developments have been made, bringing a number of new possibilities and opportunities for users.
Major challenges facing the cryptocurrency industry as a whole have also been addressed, primarily by the Ethereum community.
This resulted in advances that took the project to another level and laid the foundation for a promising future in this decade that begins.
The volatility of cryptography, which makes it difficult to use as a means of payment, for example, was mitigated on the Ethereum platform with the creation of stablecoins, such as Dai, which turned the P2P (peer-to-peer) dream into reality.
Below, you can see everything that happened at Ethereum in 2019, including this and other technological advances that are transforming the cryptocurrency industry as a whole.
Ethereum's economy continued to grow
Although 2019 was not a year of substantial increase in the price of Ether, Ethereum's economy grew, and grew a lot, mainly due to DeFi – the largest ecosystem within the platform, which proposes to be an alternative global financial system.
Last year, the amount of money stored in smart contracts that serve as infrastructure for this alternative system more than doubled, from $ 300 million in 2018 to $ 667 million at the end of 2019.
The number of DeFi protocols with significant funds has also grown a lot, diversifying this market and attracting more and more users interested in testing the new possibilities brought about by decentralized financing.
However, DeFi was not solely responsible for the economic growth experienced by Ethereum in 2019.
The increase in the volume and variety of decentralized exchanges, which make it possible to trade over the internet without the interference of centralized intermediaries, also brought more investors and money to the project.
The gaming sector within the platform also grew a lot, moving millions of dollars, and the creation of stablecoins made the dream of peer-to-peer payments a reality. This has attracted an increasing number of so-called "common" users who are injecting money into the project.
There was accentuated popularization
2019 was the year that Ethereum hit the mainstream and became substantially popular around the world.
Technological advances in the platform that we will see better in the next topic, have made it more receptive and interesting for users, in addition to providing more security and opportunities for investors.
As a result, the number of users, companies and organizations exploring the project's potential has grown across the globe. There was even a famous NBA player ‘tokenizing’ his $ 13.5 million contract, using the Ethereum platform for financial innovation.
If someone had said, in 2015, that this would happen, he would never be taken seriously. In 2019, however, this happened, along with a number of other moves towards the industry mainstream:
- NBA team Sacramento Kings launched a reward for fans based on Ethereum tokens;
- Samsung launched a platform developed for Ethereum and announced a smartphone with a native wallet for the cryptocurrency;
- The famous Star Trek series announced several collectible ships that will be launched as NFTs on Ethereum.
Meanwhile, in the corporate world, technological advances have made Ethereum more receptive to companies, which has attracted several new organizations to the platform and made it even more popular in the business world.
Several technological advances have taken place
In 2019, Ethereum underwent major technological developments that represented the most significant updates since the launch of the Ethereum homestead in 2016.
The developments addressed important issues such as customer synchronization time, transaction and issuance throughput, and customer disk I / O.
Among the many changes, there were also several advances in the ETH 1.X project.
ETH 1.X was born as a proposal to improve Ethereum, bringing more disk IO performance and synchronization time, in addition to a series of other advances in the platform.
In 2019, the project progressed and some of these goals began to be achieved.
Among them is the increase in the speed with which the system nodes are able to replicate transactions. Last year, that rate grew from 25 to 38 transactions per second.
Another advance was the decrease in the issuance of Uncle Blocks, blocks of transactions that end up being rejected by the Blockchain due to the functioning of the system and damage the platform.
This, together with the changes brought about by the Hard Fork Constantinople, reduced the Ether emission from 3 ETH to 2 ETH. As a result, Ethereum and Blockchain now have similar emission rates.
And that rate will drop even further in the future Ethereum 2.0, when the network is completely Proof-of-Stake. Don't you know what we're talking about? Keep following and find out!
What to expect from Ethereum for 2020
Despite the many technological advances that Ethereum has gone through so far, in its current state, it has failed to provide viable solutions for the business world.
It has also faced fierce competition from other blockchains, in addition to the impatience of developers and investors.
To address these and other concerns, Ethereum developers are creating a massive new update for the platform, known as Serenity or Ethereum 2.0.
This update will be released in a series of phases that will arrive in the coming years, at least one of which is expected in 2020.
This update, together with the impacts it will have, make up a scenario of opportunities and challenges for Ethereum this year and below you can see in detail everything that is expected for the platform.
The introduction of the Beacon Chain
The first phase of Ethereum 2.0, known as the Beacon Chain, is expected to be launched in the coming months with a series of changes and bringing a new blockchain based on the Proof-of-Stake protocol, which will revolutionize the platform.
The current Blockchain works through the Proof-of-Work protocol, which consists of extremely complex mathematical equations that can only be solved by supercomputers.
Its objective is to stop malicious actions, making the process of validating transactions or mining difficult and expensive. Thus, only really well-intentioned miners get involved with the platform.
Although successful in this objective, Proof-of-Work fails in many others. That's because, in addition to requiring significant amounts of electricity, it also has a limited number of transactions that can be processed simultaneously.
Beacon Chain, based on the Proof-of-Stake protocol, is much more efficient and economical, because, instead of requiring high computational power to validate transactions, Beacon Chain only considers the number of transactions already validated by miners to distribute the new validations.
Thus, the system gains more performance and security and becomes more fair and equitable, bringing more scalable transactions and reducing the dependence on electricity.
But Proof-of-Stake is not the only change that the Beacon Chain will bring. Among the many other features are:
- Attribution and monitoring of validators;
- Distribution of rewards for maintaining the network;
- Imposition of sanctions on dishonest validators.
All of these changes will have profound consequences for the Ethereum project, impacting the quote and adoption of the platform, as we will see below.
The impact of the introduction of the Beacon Chain, along with other factors, on the cryptocurrency price of Ethereum this year is still doubtful.
While some analysts are betting on rises above $ 1,000, others think the price will drop substantially despite improvements.
After a difficult year in 2019, Ethereum's value should be better in 2020.
This is because the various changes that Beacon Chain and other updates that may come out this year will make the platform more receptive to investors, companies and organizations, which should increase the price.
Increase in adoption
Another consequence of the introduction of the Beacon Chain this year will be the increase in the adoption of the platform and Ether by investors, organizations and companies in general, who will use the platform to develop even more innovative solutions.
In the coming months we will see Ethereum moving further into the mainstream of the cryptocurrency industry. News of millionaire contracts tokenized on the platform will be even more common.
With the technological developments to come, we can also expect a substantial increase in the use of Ethereum as a means of payment.
With that, the adoption should also grow among the most popular layers of the population, which means more money and innovations for the project.
2019 was a good year for the Ethereum project and Ether, and 2020 doesn't look like it will be any different.
We will have major updates to the protocol that will bring radical changes to the platform, making it more efficient, secure and ready for the future of the industry.
The challenges, of course, will also be many, especially with regard to maintaining network security, scalability and decentralization.
However, Ethereum is more than prepared for these and many other obstacles.
About the author
Lorenzo Frazzon has been in the financial market since 2007. He is an Economist, holds a Master's degree in Engineering, and is a Regulated Investment Analyst (CNPI), in addition to being Chief Strategist and founder of Investtor.