Ethereum’s next 5 upgrades
Last week, Ethereum co-founder Vitalik Buterin laid out the next 5 phases for ETH’s blockchain, which will improve scalability and efficiency. [Michael Ciaglo via Getty Images]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Bitcoin gave up most of last week’s gains. Tesla announced it sold 75% of its BTC, and mining “difficulty” dropped for a third straight week.
Vitalik Buterin explained Etherum’s future after the merge. There are four subsequent, rhyming stages that will improve scalability, says ETH’s co-founder.
The metaverse is having another moment. From Dubai to Tokyo, the metaverse is going global.
BTC UPDATE
This week in Bitcoin: Tesla’s balance sheet and dropping mining difficulty
The coming week could be an eventful one for Bitcoin as the U.S. Federal Reserve is expected to raise interest rates again and a number of big tech firms are scheduled to release earnings, all of which could add more volatility to an already jittery market. But before we cross that bridge, the biggest cryptocurrency by market cap was in the news this week due to Tesla CEO Elon Musk announcing the electric car maker had sold the majority of its BTC. Meanwhile, mining firms have seen a simultaneous increase in sustainability and a drop in difficulty, as many unplug to bolster U.S. energy grids. Let’s take a look behind the headlines.
During Tesla’s Q2 earnings call last week, Elon Musk announced the company sold 75% of its BTC, worth about $936 million. Musk explained that Tesla raised this capital defensively due to uncertainty about Covid lockdowns in China that halted manufacturing in Shanghai for three weeks. “This should not be taken as some verdict on Bitcoin,” Musk said. In 2021, Tesla became one of the most visible institutional BTC buyers after purchasing $1.5 billion of the cryptocurrency.
Energy sources for Bitcoin mining saw a Q2 improvement to 59.5% sustainability, according to the Bitcoin Mining Council. The global forum of mining firms collected data from over 50% of the Bitcoin network via a voluntary survey and found a 6% increase in sustainability from the previous year, and a 2% boost from the previous quarter. According to the report, Bitcoin mining makes up 0.15% of the global energy supply.
Meanwhile, Bitcoin mining difficulty saw its largest drop in a year as miners turned off machines during a U.S. heatwave. Mining difficulty refers to the amount of computer power required to mine new BTC on the Bitcoin network — the more miners/power plugged into the network, the higher the difficulty. Last Thursday saw a 5% drop in difficulty as American miners likely turned off machines as electricity prices spiked during extreme heat, particularly in Texas. This was the third consecutive difficulty decrease since BTC prices crashed in June.
Why it matters… Since last week’s Tesla news, BTC has gradually shed about 10%, though it is still up roughly 20% since mid-June’s lows under $18,000. As analysts and retail investors alike try to determine if the market bottom is already in, diverging opinions have emerged. Galaxy Digital CEO Mike Novogratz recently said the “worst is over” while analysts at blockchain analytics firm Glassnode note the possibility that “further downside and/or consolidation time is required to establish a bottom.” While no one can say what will happen in the future, investors who have taken the long view with crypto have historically been rewarded. Looking for some tips? We have you covered:
RHYME TIME
Ethereum’s Vitalik Buterin says after ETH’s merge you can expect the surge, verge, purge, and splurge
Last week, the entire crypto market rallied on the updated September timeline for Ethereum’s long-awaited merge upgrade, which will see the blockchain move from energy-intensive proof-of-work mining to a more energy-efficient proof-of-stake system. But the merge is only half the story — 55% to be exact — according to ETH co-founder Vitalik Buterin, who spoke about the future of the blockchain at the Ethereum Community Conference in France last Thursday. Per Buterin (the Dr. Seuss of crypto?) Ethereum will see subsequent, rhyming upgrades called the “surge,” “verge,” “purge,” and “splurge.” Let’s take a quick look at the playfully named upgrades.
The merge is Ethereum’s first major upgrade, which will see the blockchain move to proof-of-stake validation to verify transactions and unlock new ETH. The upgrade will “merge” the current proof-of-work blockchain with a proof-of-stake blockchain called the Beacon Chain, which has been running since 2020.
The surge will increase scalability and enable faster, cheaper transactions via a process called “sharding,” which essentially divides large pieces of data into smaller shards, making it even easier for layer-2 blockchains (like Polygon) to operate more efficiently on top of the main Ethereum blockchain. “Ethereum today can process 15 to 20 transactions per second,” Buterin explained. With sharding, “it’s going to be able to process 100,000 transactions per second.”
The verge refers to technical upgrades that will allow users to become network validators — computers responsible for verifying ETH transactions — without having to store massive amounts of data, which is “great for decentralization,” Buterin said.
The purge is a phase that aims to remove old network history to ease network bottlenecks and further reduce the amount of hard drive space required for validators.
The splurge includes final tweaks and fine tuning of previous steps that, according to Buterin, is the “fun stuff that will make Ethereum into a much more powerful system.”
Why it matters… Part of taking the long-view on crypto is recalling that Bitcoin is only 13 years old, while Ethereum is only seven. During Buterin’s presentation he contended that while “Bitcoiners consider Bitcoin to be 80% complete … Ethereans consider Ethereum to be 40% complete.” As the crypto market evolves alongside the underlying technology, it’s important to remember an oft-repeated phrase from Crypto Twitter — we’re still early.
THE META NARRATIVE
From Dubai to Tokyo to the cover of Time Magazine, the Metaverse is having a moment
“The Next Digital Era Will Change Everything” was the headline atop a recent issue of Time magazine that featured a deep dive “into the metaverse” from Matthew Ball, a venture capitalist and author of a new book about the buzzword that refers to our theoretical, all-encompassing digital future. But this moment of mainstream recognition wasn’t the only notable metaverse development in recent weeks. Here’s a quick roundup.
The Crown Prince of Dubai, Sheikh Hamdan bin Mohammed, unveiled the emirate’s “Metaverse Strategy” in a series of tweets last week. Sheikh Hamdan’s plan for the metaverse economy in Dubai over the next five years consists of quintupling the number of metaverse and blockchain companies, supporting 40,000 additional virtual jobs, and adding $4 billion to the economy, with the ultimate goal of entering the world’s top 10 metaverse economies and becoming “a global frontrunner in adopting digital solutions.”
A number of leading web3 brands have come together to establish the “Open Metaverse Alliance for Web3,” with the goal of creating a set of standards that will enable the industry to address the challenges of interoperability and build a metaverse where individual platforms are interconnected, open, and decentralized. OMA3, which will operate as a DAO, follows the founding last month of the Metaverse Standards Forum, a group formed by tech giants such as Meta (formerly Facebook), Microsoft, and Sony.
The University of Pennsylvania’s Wharton, a leading U.S. business school, announced it’s launching an online course called “Business in the Metaverse Economy,” which it says is the first program focused on the metaverse from an Ivy League institution. Meanwhile in Japan, the University of Tokyo will soon begin offering courses on the fundamentals of the metaverse that will be conducted in, appropriately, the metaverse. The courses are aimed at addressing a “shortage of personnel skilled to handle digital transformation,” according to newspaper Asahi Shimbun.
Why it matters… While the metaverse may indeed “change everything,” it is still in its infancy, and the nascent industry, along with the broader web3 space, will require significant investment, collaboration, and user adoption in order to displace the centralized web2 era and reframe ideas around individual ownership across the internet. This week’s headlines illustrate how this work is moving forward, and even Time magazine can’t help but take notice.
NUMBERS TO KNOW
1 billion
The total number of crypto holders by 2030, if current adoption trends continue, according to a new joint report on the future of crypto exchanges from Boston Consulting Group, Bitget, and Foresight Ventures.
$150,000
The amount an NFT trader accidentally spent after he forgot to cancel a bid he placed for the ETH name “stop-doing-fake-bids-its-honestly-lame-my-guy.eth” as part of an elaborate joke.
8 months
That’s how much longer the current crypto bear market could last, according to new research from digital asset manager, Grayscale Investments.
TUNE IN
The Degen Trilogy and the NFT-powered future of filmmaking
A question for all the cinephiles out there — what would it look like to make a blockbuster for the blockchain era? This week, Coinbase is teasing the answer to that question with part one of The Degen Trilogy, an interactive short film series that combines NFT technology with the collective ethos of the NFT community. After hosting a casting call for Bored Ape Yacht Club owners, seven NFTs were cast in the web3 action adventure, each with smart-contract enabled licensing. For the first time ever, NFT owners get to participate in and benefit from the on-screen action. And this is just the start.
TOKEN TRIVIA
How often is Bitcoin’s blockchain updated with new transactions?
A
Every 10 minutes
B
Once per hour
C
Once per day
D
Twice per day
Find the answer below.
Trivia Answer
A
Every 10 minutes
