Vitalik Buterin is thinking outside the box, no surprise there. The mind that brought Ethereum to life has had another idea, and it’s a good one if it works. Buterin says implementing the zk-SNARKS technology powered by Zcash will help Ethereum scale to 500 transactions per second. The increase in scale would still not rival the thousands of TPS powered by Visa or Mastercard but it is an exponential leap in speed that would propel Ethereum to the forefront of the blockchain based financial market. In other words, fears that ETH will become obsolete may be unfounded.
ZK-SNARKS stands for Zero-Knowledge/Succinct non-Interactive-Argument-of-Knowledge. It is a technology that lets one entity prove that they are in possession of certain information without having to give that information up. It is a privacy-based protocol that Buterin says could be integrated into the Ethereum network in a way that lets transaction processors bundle transactions and then mass-validate them using zk-SNARKS.
“There are two classes of user: (i) transactor, and (ii) relayer. A relayer takes a set of operations from transactors and combines them all into a transaction and makes a ZK-SNARK to prove the validity and publishes the ZK-SNARK and the transaction data in a highly compressed form to the blockchain. A relayer gets rewarded for this by transaction fees from transactors.”
The real value of this process is that it would allow transactors and relayers to perform all validation on the main blockchain without the need for side-chains and second-layer channels. What it really means is that Ethereum could scale without the need for Plasma or Sharding, two long-coming upgrades the network developers have been working on. The Constantinople upgrade is still scheduled for late October and expected to bring 5 important changes including a decreased mining reward aimed at curbing ETH inflation.
The price of ETH fell despite the good news. The token shed more than 15% in the last week and has confirmed resistance at the short-term moving average. This move may result in further downward movement for the token but there are signs of support in both MACD and stochastic.
Both indicators have diverged from the recent low and created a series of peak that show at least a potential for reversal in the near-term. If ETH/USD does move lower support is likely to be found near $185. A move above the short-term EMA would be bullish.
