The Ethereum Foundation recently announced that the developer community plans to implement an upgrade to the blockchain which will require a hard fork.
It is important to note that the requirement of a hard fork does not necessarily precipitate a split of the Ethereum chain and its separation into two separate currencies.
If all miners agree to follow the new fork of the blockchain, Ethereum will continue on unimpeded.
However, miners may decide to continue mining the old chain instead of switching to the forked Ethereum blockchain, and this is what causes two separate cryptocurrencies to be created.
Luckily, discussion within the community seems to point towards a consensus in upgrading the Ethereum network to its next development iteration, Constantinople.
Moving away from miners
This network upgrade includes a number of changes, which are defined as Ethereum Improvement Proposals (EIPs).
Many of these EIPs add features which improve the scalability of the blockchain and reduce transaction fees when interacting with smart contracts.
Others deliver more aggressive changes, taking steps towards proof-of-stake (PoS) as a consensus mechanism, instead of proof-of-work (PoW).
PoW is the mechanism used by Bitcoin and relies on the computing power of miners to establish a safe consensus, rewarding miners with cryptocurrency.
Ethereum planned to phase out PoW in favour of PoS by implementing a “difficulty bomb”, which would increase average block times until it became important to move to proof-of-stake.
EIP 1234 will be implemented in the Constantinople update, and will delay the onset of this difficulty bomb for another 12 months – giving developers time to complete work on PoS without threatening the functionality of the blockchain.
This EIP will also reduce the block rewards substantially to adjust for the delay.
Cryptocurrency holders and miners mining to a pool do not need to change anything, but users running a node will need to update to the latest version of Ethereum or risk being left behind on the older chain.
The launch of the Constantinople upgrade was set to take place on 17 January, but has since been postponed due to a security issue.
A new release date for the network update will be announced after an Ethereum developer meeting on 18 January.