If you’ve been staying up to date with the latest developments in Web3, you’ll likely have come across or heard about the EthereumPoW (ETHW) hard fork. In September 2022, the Ethereum network moved a step closer to completing the transition from a Proof-of-Work (PoW) consensus mechanism to Proof-of-Stake (PoS). The update is known as “The Merge”. It sees the execution layers of the original PoW chain and the new PoS chain combine into one, marking a significant landmark in the Ethereum 2.0 roadmap. Also, this transition will reduce the amount of energy required to validate transactions on the Ethereum blockchain and help it scale without friction. However, some Ethereum miners believe the update poses a risk to their earning potential. Moreover, the EthereumPoW hard fork is a direct response to the Ethereum 2.0 updates. So, if you’re wondering, “what is ETHW?” or “why did the EthereumPoW for happen?” – read on!
In this article, we’re going to dive deep into the EthereumPoW hard fork. We’ll explore the reasons behind the fork and how the new network differs from the original Ethereum blockchain. Also, we’ll discuss the ETHW token distribution, the ETHW community, and what the future holds for the project. Plus, we’ll look at the history of the network and the hard fork that led to the creation of the Ethereum Classic chain.
Exploring Ethereum
Before we address the question, “what is ETHW?”, let’s take a moment to explore the Ethereum network and how it came to be what it is today. Ethereum is a decentralized smart contract blockchain. The idea for Ethereum was conceived by Vitalik Buterin in 2013 before becoming a reality in 2015. Ethereum is widely cited as being the catalyst for decentralized finance (DeFi) and “programmable money”. Also, many of the pioneering technologies built on Ethereum have been replicated on other smart contract blockchains.
Ether (ETH) is the native cryptocurrency of the Ethereum network. ETH miners receive ETH for validating transactions. Each transaction on the network requires an amount of ETH to pay transaction fees. Plus, ETH is the primary medium of exchange and unit of account for the various DeFi applications throughout the network.
Furthermore, Ethereum was among the first major blockchains to allow other developers to launch cryptocurrencies without building a native blockchain from scratch. This breakthrough paved the way for the ICO (initial coin offering) boom of 2016 in which many of the most popular crypto tokens of today were launched. However, the Ethereum network underwent a significant divide following a smart contract exploit in the same year.
Ethereum Classic
Ethereum Classic (ETC) is the original iteration of the Ethereum blockchain that was forked following a hack on “The DAO” in 2016. The DAO is the decentralized autonomous organization and venture capital firm that raised $150 million for a landmark Ethereum token sale. The DAO exploit saw 60 million dollars worth of ETH drained from the DAO smart contract, prompting a disagreement within the Ethereum community about the future of the network and highlighting philosophical differences among network members.
The Ethereum network underwent a hard fork to restore the stolen assets. During a soft fork, only one blockchain remains. However, when a hard fork occurs, the blockchain splits in two. Following the DAO smart contract hack, the Ethereum network split into two separate chains; the original Ethereum chain became Ethereum Classic, while the new chain remains as Ethereum.
The Ethereum network was only a year old during the DAO exploit, and a significant portion of the community wanted to see high-profile investors reimbursed. However, the fork was extremely controversial, particularly among members of the community who believe that “code is law” and any changes to a blockchain protocol are detrimental. Moreover, some within the minority who remained with the original chain did so on the grounds that blockchain projects should not receive bailouts, as they would suffer the same fate as the dwindling financial institutions that prompted the creation of Bitcoin.
Although the original Ethereum Classic chain still exists, it has been the victim of numerous exploits since the DAO hack in 2016. Proof-of-Work (PoW) blockchains become more secure as they grow in size. As the two most-prominent blockchain networks, Ethereum and Bitcoin are highly-secure. However, Ethereum Classic is significantly smaller, making it easier for a bad actor to gain 51% of the network’s hash power and cause double-spending.
Ethereum 2.0
The term “Ethereum 2.0” refers to the series of updates that began in 2020 to help the Ethereum network transition from a Proof-of-Work (PoW) blockchain to Proof-of-Stake (PoS). The Merge is the most significant of these updates at the time of writing. As the name suggests, The Merge sees the old PoW chain join with the new PoS chain in the final stages of the transition, which will allow Ethereum to scale while significantly reducing the network’s energy consumption.
Furthermore, Ethereum 2.0 will use a technique known as “sharding” to split the main blockchains into smaller localized chains that communicate transactions back to the main chain. The result is a faster, cheaper, and more reliable network.
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What is EthereumPoW (ETHW)?
Now that you’re familiar with the history of Ethereum let’s take a look at EthereumPoW. EthereumPoW is a hard fork of the Ethereum blockchain. While the majority of the Ethereum network agreed to move from a PoW consensus mechanism to PoS, some miners chose to remain with PoW by forking the codebase into the EthereumPoW chain.
The transition to PoS will reduce the carbon footprint of Ethereum and allow it to scale and meet the ever-growing demand on the network. However, several Ethereum miners believe that the move away from PoW will negatively impact their earnings. EthereumPoW addresses this issue by allowing miners to continue using their mining rigs to validate transactions. However, they will earn the new ETHW cryptocurrency instead of ETH.
On September 13, 2022, the development team behind the ETHW fork known as “ETHW Core” announced that the ETHW mainnet would go live within 24 hours of The Merge. Despite the team being anonymous, the project has some prominent backers. Plus, the ETHW coin is available on several prominent exchanges.
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Why Did the ETHW Fork Happen?
Moving away from GPU-based PoW mining allows the Ethereum network to scale while reducing its carbon footprint and increasing reliance on electricity. However, the transition to PoS leaves a graveyard of Ethereum mining rigs behind. Historically, mining Ethereum via PoW can has been a lucrative endeavor. Also, many consider PoW to be better at encouraging decentralization than PoS.
Furthermore, ETH miners who didn’t want to move to PoS were left with little alternative other than to mine Ethereum Classic (ETC), which has been the victim of multiple exploits in recent months. Resultantly, the ETHW Core community was formed, and a new PoW blockchain was born.
To promote the new ETHW fork, several prominent exchanges and wallets participated in an airdrop that distributed free ETHW coins over a two-week period in September 2022. Anyone holding ETH before the snapshot was airdropped an equal amount of the new ETHW coin. At the time of writing, ETHW is trading at $6.39, 89% below its all-time high of $58.54 on September third, according to CoinGecko. It has a circulating supply of 107 million and a market cap of $684 million.
The price dip coincides with the hiccups that caused problems during the fork. The ETHW Core team experienced several technical issues. This includes an exploit that saw 200 ETHW being stolen and reports of latency throughout the network.
PoW vs PoS
Proof-of-Work (PoW) and Proof-of-Stake (PoS) are blockchain consensus mechanisms. They allow network participants to validate cryptocurrency transactions in two distinct ways. PoW consensus requires validators to compete against each other to be the first to solve cryptographic puzzles. The first to solve the puzzle earns the right to validate transactions and earn the relevant mining rewards. However, PoS works by requiring validators to lock up crypto assets to secure the network and validate transactions.
PoW mining requires a lot of electricity. The Bitcoin network uses roughly the same amount of energy as a country like Sweden or Argentina. To remedy this, many new blockchain networks adopt a PoS consensus mechanism. PoS lowers the carbon footprint of a blockchain network because validators don’t have to use vast amounts of energy to validate transactions. On the other hand, PoW chains require more energy expenditure as they grow. Plus, they become more secure as they grow, which further encourages energy consumption.
With this in mind, it’s perhaps understandable that many people have concerns about the scalability of PoW chains. Scalability was one of the major factors that contributed to Ethereum’s transition to PoS, making it a potential limitation for any PoW forks. Also, the data structures used in PoS chains make them less profitable for any potential attackers.
On the other hand, some argue that PoS is limiting because of the financial barrier to entry it poses. To become an Ethereum PoS validator, you need to lock up a minimum of 32 ETH. That said, Bitcoin mining requires expensive machinery, which also poses a significant barrier to entry for the most well-established PoW chain.
Other Prominent Forks
Forks are commonplace in the crypto world. When there is a divide within a community about the future direction of the network or the native cryptocurrency, forks provide an opportunity for both sides of the divide to continue in what they see fit. The Bitcoin blockchain has been forked multiple times over disagreements about changes to the underlying protocol. Notable forks of the Bitcoin network include Bitcoin Cash in August 2017, Bitcoin Gold in October 2017, Bitcoin SV in November 2018, and eCash in November 2020.
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Exploring EthereumPoW (ETHW) – Summary
Despite the various issues that occurred during the fork, the project remains within the top 100 cryptocurrencies by market cap. Also, ETHW is available on several major exchanges, including Coinbase and Binance. However, the long-term viability of ETHW is unclear. While the reasons behind the fork may seem obvious, the new chain has no clear roadmap, and the team is anonymous. Also, at the time of writing, ETHW has no stablecoin support or reputable decentralized finance (DeFi) community attached to it.
Some analysts suggest that the new coin bears similarities to “pump and dump” schemes, though it is still early days for EthereumPoW. Nonetheless, the team behind the new chain has released an ecosystem table containing multiple new projects building on EthereumPoW. As with any new project or fork, always conduct your own research and watch out for scams.
Moreover, the EthereumPoW fork represents a philosophical divide within the Ethereum community. While the majority of the community seems happy to move towards PoS, some miners are clearly keen to remain with PoW. Applications are being submitted by potential projects to deploy their decentralized applications on EthereumPoW. Plus, there is a growing ecosystem of projects building on the new chain.
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