Hello everyone ! In this article we will talk about Ethereum, specifically, on the vision of one of its creators, Vitalik Buterin.

A brief history of Ethereum

The Ethereum protocol was launched nearly 8 years ago, in July 2015. Since then, it has been at the forefront of cryptocurrency innovation. It has played host to various trends, including ICOs, DeFi, NFTs, and many others.

Simultaneously, the network has also undergone technical advancements. The most recent major evolution is the transition from proof of work to proof of stake, culminating in The Merge, which was finalized in September of last year.

Evolution

Nevertheless, Ethereum co-founder Vitalik Buterin believes the success of Ethereum will come down to three major technical “transitions” that need to happen almost simultaneously.

Source : cnbc.com

The three major axes of evolution are as follows:

1. Scaling through Layer 2
2. Transition to smart contract wallets.
3. Enhancing privacy.

In his article Vitalik explains why it is so important to improve those axes :

“Without the first, Ethereum fails because each transaction costs $3.75 ($82.48 if we have another bull run), and every product aiming for the mass market inevitably forgets about the chain and adopts centralized workarounds for everything.

Without the second, Ethereum fails because users are uncomfortable storing their funds (and non-financial assets), and everyone moves onto centralized exchanges.

Without the third, Ethereum fails because having all transactions (and POAPs, etc) available publicly for literally anyone to see is far too high a privacy sacrifice for many users, and everyone moves onto centralized solutions that at least somewhat hide your data.”

One of the solution for the scaling problem and the astronomical fees is rollups (and other Layer 2 solutions) that enable significantly lower transaction costs. Instead of executing all transactions directly on the Ethereum chain (which proves to be expensive), rollups perform transactions off-chain and then 'roll them up' into a single batch. This batch is subsequently submitted to the main chain.

What are smart contract wallet

Smart contract wallets are a type of wallet, that is made possible by account abstraction. Instead of controlling a wallet with a private key, the user controls a smart contract holding the funds. Smart contract wallets offer recovery without seed phrases, transfer limits, account freezing and multi-signature (multi-sig) transactions. These features make smart contract wallets more secure, user-friendly and interoperable than regular wallets. Smart contract wallets can also interact with decentralized applications (DApps) and can be used for standard cryptocurrency transfers.

All of that allow a higher level of security.

Privacy

Lastly, the third axis of evolution highlighted by Vitalik aims to enhance privacy. Several avenues of consideration are being explored in this regard.

Firstly, he notes that privacy requires each user to have even more addresses, or even change the type of addresses we interact with, depending on the use cases. For example, instead of having one address per user, we could have one address per user per application, or even one address per user per application per day. However, it will be the responsibility of wallet applications to implement these mechanisms to facilitate the user experience.

Conclusion :

All these axes will enable Ethereum to evolve into a blockchain that combines low transaction costs, enhanced wallets providing increased security, and ultimately, reinforced privacy protection.

Disclaimer : This is not a financial advice, always do your own research !

As always, thank you for reading !

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