My first ever cryptocurrency was probably Cardano (ADA), but Charles Hopkins was more known as ‘Ethereum co-founder’ than ‘Cardano CEO’. Funny right? Well, that just goes a long way to explain how influential ethereum is in the crypto space. Arguably more popular than bitcoin amongst technically inclined blockchain enthusiasts. If you got in here for the quick bucks, then it should be bitcoin for you. but that’s by the way…
Trying to dive into ethereum’s technology or attempting to use its infrastructure, one runs into numerous issues. With the size of Ethereum’s archival nodes currently sitting at over four (4) terabytes (4Tb) and the actual blockchain size well over a hundred (100) Gigabytes and each block adding two (2) Megabytes to this already huge figure, the Ethereum blockchain according to many ‘will never scale’ and in 2019, Bloomberg reported the Ethereum blockchain is ‘almost full’. Scalability and memory friendliness are both very appealing features and good ingredients for mainstream adoption, ethereum lacks both.
Chart culled from Etherscan
Your attention must have been drawn to a recent transaction with a transaction fee of over 10,000 ethereum coins to transfer 0.55 ethereum coins to another address. Well, transaction fees are relatively very much lower currently, but compared to most other blockchains, ethereum transaction fees are ‘high’.
Unarguably one of the biggest events expected to happen soon on the crypto space is ethereum moving from Proof of Work to Proof of stake. The upgrade to ethereum 2.0 also known as SERENITY is expected to bring moment-defining changes to the ethereum ecosystem. This upgrade changes ethereum’s consensus algorithm to proof of stake. Time to switch off the mines guys!
Being home to most decentralized applications and smart contract projects on the crypto-sphere, ethereum is a very influential project. This change says a lot about ethereum and could mean a lot for blockchain technology.
But what could these be? Let us know in the comments sections!
Here are my (very) personal opinions:
Proof of stake (POS) wins again
Ethereum moving to Proof of stake and Defi projects springing up seriously lately spells a defining moment in the crypto space. Being the most popular altcoin and only second to bitcoin itself, ethereum blockchain, its ether coin and the numerous smart contracts running on it have seriously rocked the crypto space and is unarguably the most copied project in blockchain technology. Changing its token generation scheme to proof of stake is for sure a big win for the proof of stake technology.
To be frank, I’ve always been a fan of Proof of work coins, to an extent I feel it is a cleverer and a more sophisticated technology than proof of stake, but maybe Vitalik got to school me better. Whichever way, Proof of work still holds a special place in my list.
The move to proof of stake is expected to add more flexibility to the ethereum blockchain, a feature it terribly lacks. Proof of work algorithm is a complex computing protocol. Running a node for a proof of work coin requires enough computing power and of course, a whole lot of electrical energy. Working on computer resources, proof of work operations piles pressure on the device resources, stores an enormous amount of data and consumes the device memory in an outrageous manner. Poorly scaling blockchains like ethereum and bitcoin would consume double to three-digit gigabytes on your device and heat up the device.
Proof stake algorithm is energy conserving in all aspects. Due to its memory friendliness and relative simplicity it makes judicial use of computing resources. Staking process also provides a more flexible token generation algorithm in contrast to the very much complex proof of work. Getting rid of the mining process saves the electrical power required to mine tokens.
Moving to POS spares ethereum blockchain of this turmoil, guess that’s why it was named SERENITY! Well, it’s serenity and peace at last for ethereum believers and skeptics. As amazing move…arguably.
Fate of smart contracts and DApps
Projects built on the ethereum blockchain makes up a very huge percentage of the whole cryptocurrency market. It is unarguably the largest ecosystem in the crypto-space. The upgrade to 2.0 and switch to POS is a very important one and one would wonder what effect it will have on the occupants of this ecosystem.
Ethereum’s rigidity and vast issues have also been a problem for smart contract projects in its ecosystem. A number of them have made attempts to solve some of Ethereum’s issues.
POA network is building a sidechain application which hopes to solve Ethereum’s scalability issue and allow organizations and game developers to build their own networks and deploy their DApps in a faster, more scalable and a lower fee network. Many other similar smart contract projects on the ethereum network are focused on solving the three issues plaguing the ethereum blockchain; poor scalability, high transaction fees and low transaction speed.
Singapore-based ethereum smart contract project, Loopring has developed a couple of working solutions to Ethereum’s issues. Loopring’s technology strives to create a platform for building and deploying high efficiency decentralized exchanges on the ethereum blockchain. Using the Zero Knowledge Rollup (ZK-Rollup) protocol, Loopring have been able to provide solutions to Ethereum’s poor scalability and as well, its slow transaction speed.
Other projects on ethereum blockchain have been limited in many ways by the long-lasting issues the blockchain faces. If the upgrade to 2.0 solves these issues, then things are expected to get even better for these projects and their growth could speed up even more.
Ethereum overpowered by its issues?
Ethereum ran into these issues and have lived with it for so long. It is home to many brilliant developers; however, they only manage to parry these issues for years instead of solving them. The ethereum blockchain has in fact not progressed so much over these years. Attempts at tackling scalability issues are basically management strategies and very little in-roads have been made towards solving the scalability issues it faces.
During this time, a couple of other Proof of work blockchain projects have developed solutions to Ethereum’s issues while ethereum remained stuck. Low transaction fees, infinite scalability, flexibility…most ethereum issues have been solved by different blockchain projects. Pascal blockchain could run for years and add only 26 megabytes of data to its blockchain size. Ethereum blockchain would increase by the same size after only thirteen blocks.
Ethereum have remained dormant over these years and its only solution to solving this issue is a total change of consensus algorithm. It is pertinent to say that ethereum 1.0 was overpowered by its issues and ethereum 2.0 is an escape from the shackles of ethereum 1.0. Being a leading figure in blockchain technology, one would expect ethereum to tackle these issues in a different way without shifting its original form totally…well that wasn’t the case, we got a new blockchain…lol.
Well, anything that solves a problem is a solution. I’d expect ethereum to do something different, but this is a whole lot already and if it solves the issues it faces currently, then its brilliant enough to get an applause from the crypto community.
The upgrade to 2.0 is moving at a good pace and we might see a completion months from now.
Until then, I’ll cross my fingers and read your comments.
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