Thursday , 22 March 2018

Ethereum surges 15% to new historic high causing the congestion of the network

The price of Ether, the native cryptocurrency of Ethereum, has surged by more than 15 percent overnight, achieving a new all-time high at $1,266.

Four days ago, on January 4, the price of Ether established a new all-time high at $1,000, surpassing the $1,000 for the first time in its two-year history. The market valuation of Ethereum surpassed a staggering $100 billion, becoming the third cryptocurrency to do so apart from bitcoin and Ripple.

Merely four days later, on January 8, Ether demonstrated another major increase in value, reaching $1,266 across all global exchanges such as Binance and Bittrex.

According to Etherscan, the Ethereum network is processing more than 1.2 million transactions on a daily basis, settling more payments than all of the cryptocurrencies and blockchain networks in the market combined, including bitcoin.

The Ethereum network has to process more transactions than other blockchain networks because it operates as the base protocol for large-scale decentralized applications. Applications like CryptoKitties and EtherDelta, that have many active users requesting multiple transactions per day, are placing a heavy burden on the Ethereum network.

The congestion of the Ethereum network caused by the rising popularity and activity of decentralized applications can be resolved through second-layer scaling and solutions such as Plasma, Sharding, and Casper. But, as Augur co-founder Joey Krug noted, there are not enough developers working on the core protocol of Ethereum and consequently, Ethereum co-founder Vitalik Buterin stated that fully scaling Ethereum could take two to five years.

Bittrex disables deposits

With the surging price of cryptocurrencies, demand has reached the point where cryptocurrency exchanges are completely swamped. This massive influx of users has led to major infrastructure concerns leading to the temporary closure of their registration portals.

If the gas costs increase due to the congestion on the Ethereum network, it becomes more inefficient and challenging for decentralized applications to operate seamlessly and handle millions of requests in a brief period of time. For this specific reason, Bittrex also disabled new Ether and asset deposit addresses from being created.

Other major cryptocurrency exchanges like Binance and Bithumb have not disabled Ether deposits and the creation of new deposit addresses. Considering the large number of unconfirmed transactions on the Ethereum network, it is likely that Bittrex will disable new deposit addresses from being deployed for a relatively long period of time.

It has also started to cost users more than $1 to send Ether from one address to another. While the current rate of Ether transaction fee could decrease in the short-term, until then, users on exchanges and decentralized applications will struggle.


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