Arguably the largest demonstration of Ethereum's proof of concept is due to take place with the impending Metropolis update. Significant technological advancements demonstrate proof of concept to investors and can signify opportunities for price rallies.
Metropolis is the third of four planned network updates. The first two updates, titled Frontier and Homestead,have already taken place. Metropolis will be composed of two hard forks, known as Byzantium and Constantinople, that are projected to occur between September 22 and October 27. Without being too technical, these are the expected effects from the Byzantium half of the Metropolis update.
A ‘Difficulty-Bomb,’ commonly referred to as the ‘Ethereum Ice Age,’ is delayed and will take place on the second Metropolis hard fork. However, block rewards to miners is being reduced from 5 to 3 ether per block. The purpose is to shift Ethereum from proof-of-work (PoW) to proof-of-stake (PoS) consensus, thereby reducing the amount of electricity consumed when mining.
Smart contract programming will be simplified, more secure, and made easier for current developers. Changes to the protocol will allow novice users to gain an interactive understanding of the technology.
Increased anonymity will occur with new ‘zk-SNARKs,’ also known as zero-knowledge proofs. Defining what that means would take eons. However, the important thing to know is greater potential will exist for users to create anonymous transactions and privacy, security, and scalability will be enhanced.
Increased security known as “Account Abstraction,” will protect against quantum computer hacking
Metropolis is a big test for Ethereum, it’s the critical update that is slated to make the technology more efficient, scalable, and easier to use.
Now the million-dollar question. What effect does all this have on the price? To try and predict the market reaction we can look at price action in response to the Homestead release.
Homestead took place on March 15th and the price rallied from $12 in February to a new high of $30 by March 14th. A rally of 172%. While expectations of a similar rally should be tempered its important to note that this update makes the technology more scalable, secure, and accessible. This should lead to an increased number of users on the network, thereby pushing the price up.
Remember however, that when mining slows, prices typically decrease. In addition, there may be unforeseen challenges that arise because of Metropolis. That being said, to this point the team and community around Ethereum have been well-prepared to tackle impromptu challenges and limitations. If successful, this update will certainly add to the intrinsic value of Ethereum and demonstrate greater proof-of-concept.