In the past two years, the Ethereum has faced a number of problems that have caused (paradoxically) the growth and subsequent collapse of this project. The value of this network’s native token from its ATH ($ 1300) has dropped to an incredible $ 80 and is currently under three hundred. The number of ICO scams relative to real projects is 98: 2 (in favor of scams), and to make matters worse, even a few functional projects have virtually saturated the speed of Ethereum blockchain.
Did you send ethers to someone recently? It is expensive and will only be more expensive. Vitalik Buterin summed up the situation very well.
In order for Ethereum to grow, large players must be able to base their functionality on ETH blockchain. However, this would overburden the system while using this computing network, and transaction fees would climb tenfold. Scalability is Ethereum’s biggest problem.
What is scalability?
Well, Ethereum, like any blockchain, has a maximum number of transactions that can be handled by the network. This number is also referred to as TpS (Transactions per Second) and in Ethereum it is about seven. However, we must also include smart contracts, which pay for each executed instruction.
At present, it works so that every computer (node) connected to the Ethereum network must verify each transaction and each smart contract. This means that with more computers connected, network speed will not increase.
Practically since the creation of the Ethereum project, emphasis has been placed on scalability. Basically, a measure of increasing network performance with increasing computing power. In other words, we want a blockchain in which the rule will apply: the more computers, the more TpS.
Currently, TpS is virtually independent of real network performance and cannot be increased.
What is Ethereum 2.0?
Essentially, Ethereum 2.0 is a series of enhancements that dramatically improve Ethereum’s blockchain performance (TpS), allow scalability, and let’s not forget to try to create a greener mining model and stop inflation.
Casper – PoS
In the future, the Casper project, which is currently in the testing phase, will replace the current mining method based on the purchase of video cards and burning a huge amount of electricity onto the system of “stacking” ETH tokens.
Proof-of-Work will replace Proof of Stake.
This in turn will allow the current inflation to stop. The creation of new ETH tokens will be phased out and the rewards for “stacking” will come directly from transaction fees and smart contract execution. To be sustainable, we will need a lot of smart contracts. However, Casper will not allow a significant increase in the ETH blockchain (TpS) rate.
The scalability of the blockchain will allow for sharding – that is, a sort of fragmentation of the network into groups – shards – which will “divide work” between themselves. In other words, one shard verifies one half of the transactions and the other shard verifies the other. Thanks to the amount of mathematics it will be possible to increase the number of shards to hundreds and thus significantly increase the maximum capacity of the ETH blockchain.
Deserved criticism of Ethereum
Ethereum has had several serious fuckups that have severely damaged the name of this project. Many will remember the controversy about the DAO Project, problems with Ethereum ASICs, or other stupid things. Let’s not forget the biggest fuckup of Ethereum, which was all year 2017 and early 2018. One thing is that the value of this token increased from $ 7 (early 2017) to a record $ 1300 (January 2018) and then dropped to $ 80 (December) 2018). At the moment, they are still bothering at a miserable $ 250.
The ethereum has created a certain expectation in many people that has certainly not been met. The worst, however, was clearly a wave of scam ICO projects that robbed millions of people with money. Only in this way tens of billions of dollars (according to capitalization) evaporated, and this whole wave of growth that Ethereum experienced in 2017 was actually a wave of frauds.
The position of the biggest altcoin is all the more difficult because it is attracted by competitors with significant momentum. For example, Binance blockchain, EOS or TRON! And of course, let’s not forget the silent crypto-giant – Facebook, who will surely mimic the Ethereum model to some extent, is likely to offer a better product and attract more developers, more customers and money.
The future is Ethereum 2.0
Therefore, I put great hope in the Ethereum 2.0 project, which at the moment seems to be the ONLY ONE successful future for the entire Ethereum. If Vitaliku Buterin and his team manage to finish what they started and they don’t come late with their “revolution”, we have something to look forward to. How will it be? Time will tell.
What about the price?
Will Ethereum cost thousands of dollars in the end? It is possible. However, the success of the entire project is currently in the hands of developers, who are perhaps finishing. They are really trying and even have results. It is rumored that Ethereum 2.0 could be launched this year.
ETH/USD all time graph