According to Ethereum website Ethereum is the community-run technology powering the cryptocurrency ether (ETH) and thousands of decentralized applications, in short be the basis of all blockchain codes and smart-contracts but will it be able to power it?
Ethereum is no doubt a very important cryptocurrency currently with a market share of 27% at the time of writing this article and currently Ethereum powers many of the transactions and is used to create smart contracts. The documentation of Ethereum is also quite good and easy to understand for an average developer at least to start with. So if there are so many advantages of Ethereum why am I beginning to doubt it? The answer lies with the huge gas fees along with slow speeds that are associated with Ethereum transactions.
Now let us just know a bit of how websites are built, a concept called Abstraction, now most of you would know (those who have studied engineering) that there are 2 layers networking layer and application layer and the programmer does not build his website of networking layer but rather abstracts on top of it. In simple words it does not matter in the end what is being used in the website as long as users don't face any problems, the networking layer is secured that technology shall be used. In case you want to relate with real life most of you don't know which types of protocol (TCP, IP, UDP, etc.) your browser is using and to be frank you don't care.
Basically in web 3.0 the foundations will be the networking layer and that is where the blockchains like Ethereum, Solana, Polygon Matic etc and on top of that will the Metaverse application shall be.
Now what does this all mean in layman's term? It simply means in the future it does not matter what kind of blockchain shall be powering the internet, which ever technology is most suited, cheaper shall be used.
Let's also understand one thing clearly too
- Blockchain can in theory unlock some of the many long-promised uses of the technology — cheap and fast payments, decentralized finance applications, even consumer products like games — but not if the underlying technology effectively prohibits development.
- For developers, crypto isn't a speculative asset class but a platform on which they can build software that sets the rules for transactions known as smart contracts. Blockchain evangelists see smart contracts as key to crypto moving beyond just a store of value or a token for trading.
There are so many competitors out there and once the abstraction is there for a common user it would not even matter which type of blockchain is being used if the technology works and is secure and most importantly cheaper. Let's look at some of them and how are they performing...
- Solana, launched last April, is claimed to process 50,000 transactions per second, compared to Ethereum's 15 to 30 per second, with costs of $0.00025 per transaction. The project was built to focus on optimizing hardware that crypto software runs on, not just the software, said founder Anatoly Yakovenko, CEO of Solana Labs, who previously worked at Qualcomm. Jump Trading, Virtu Financial, Cumberland DRW and Genesis Global Trading have all signed on to Pyth, a decentralized real-time financial data network built on Solana that provides stock, crypto and fiat currency prices.
- Avalanche, which launched last September and is claimed to handle 4,500 transactions per second. DeFi projects such as DeFi exchange SushiSwap, oracle network Chainlink, and DeFi protocols Aave and Curve have used Avalanche. Topps recently launched NFTs on Avalanche.
- Polygon, is a very exciting technology that might be the replacement of Ethereum, just last month Reddit Co-founder created a $200 million initiaive with Polygon for 3.0 (source).
Specialized uses are also growing, which look at the technology in whole new ways.
- Celo has targeted mobile uses for blockchain, trying to make crypto more accessible, particularly in emerging markets. The system essentially turns phone numbers into something like public crypto keys that can accept cryptocurrencies via a Celo wallet. It has received backing from the likes of Andreessen Horowitz and Deutsche Telekom.
- Flow has become popular for NFTs, particularly with large brands. Dapper Labs, the company behind Flow, built the blockchain specifically for NFTs. NBA-licensed NBA Top Shot was built by Dapper Labs, and the NFL is also launching NFTs built by Dapper Labs on Flow. Game developer Ubisoft and Dr. Seuss Enterprises also have products in the works on Flow.
And the technology plays a big role for many developers. "We saw there were a lot of developers that just really wanted a different set of tools," said Solana's Yakovenko. "They wanted to write high-performance code. They wanted to effectively kind of get close to the metal and have tools that are more standard."
- Solana's Yakovenko touts Solana's use of the programming language Rust, which has been voted the favorite language among programmers, while Ethereum uses Solidity.
- Some investors and developers debate the merits of Ethereum competitors in terms of their compatibility with Ethereum. Avalanche has touted its Ethereum Virtual Machine, which allows developers to port over smart contracts from the popular blockchain. Solana's Yakovenko, however, said its break with Ethereum brings more original projects to Solana.
What about Ethereum 2.0?
Ethereum 2.0 is an improvement over the existing technology due to which it shall become more sustainable and which would help in reducing gas fees. You can check it out on their website which explains in detail what is it about, how it works and the roadmap of it. The Beacon chain already went live on Dec 1, 2020 and is expected to be completed by the end of 2023. So will Ethereum survive?
Ethereum 2.0 would certainly help reduce transaction fees and improve speed and with the fact that with it the gas fees would decrease and shall be faster means more users would be able to use it, which in turn would increase the share price. Whether or not this happens is a entirely different story.
In the end I would not count Ethereum out. It still has the widest reach, biggest network and the security and decentralisation that attract crypto enthusiasts.