He did not exactly use these words yet that was the point of his message. In a frank admission, Vitalik Buterin, co-founder of Ethereum, admitted that the blockhain is basically useless for most applications. Of late, the chain got a great deal of attention for its high fees and slow transaction time. The plan is to switch from a PoW to a PoS system. Unfortunately, that is not likely to happen for a couple of years.
Scalability is always something that is being raised as an issue within the cryptocurrency circles. Both Bitcoin and Ethereum, the two leading chains, are hindered by the inability to process more than a handful of transactions per second. In comparison, payment networks such as Visa do tens of thousands of transactions most times during the day.
If blockchain is going to present an alternative to the present financial system, as well as data, then scaling is at the top of the list. Buterin's admission opens up the conversation of where to go from here.
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Of course, he also mentioned the fact that, since the base layer is "gassed", it is best to look to the second layer for scaling solutions. This is really the only choice left. It mirrors what Bitcoin is doing with the Lightning Network.
This does bring up the question as to why would one opt for a blockchain where the scaling is limited and requiring an additional layer?
Here is where we see some of the drawbacks to the earlier chains. Over the last few years, since Ethereum burst onto the scene, we saw a number of blockchains that are far more capable in terms of the throughput than what the top two can offer.
If we think of blockchains as roads, Bitcoin and Ethereum are side streets that were built long ago. Since their construction, we saw super highways enter the picture that takes the bulk of the traffic. The side streets still have value and can handle some big loads, yet volume is not their forte.
By looking into layer 2, the data will be processed off-chain. This brings up an interesting situation as to what exactly is taking place. One of the biggest benefits of blockchain, at least with the base layer, is the immutability and transparency. This gets a bit sketchy when dealing with layer 2 solutions.
It is fascinating to watch the development of the chain that was touted as the world's virtual computer. As we are seeing, in a world of AI chips, this is akin to running on a 486.
Fortunately, if we step back a bit more, we see how there is a solution. Interoperability is starting to really come into play. Most realize that we are not going to live in a "one blockchain for all" world. There will be thousands of chains out there, catering to many different needs. The key will be tying them together the same way one can travel around to any webpage without interruption.
Hive, for example, offers fast and feeless transactions. This is one of the better chains in terms of transactions capability. However, since it lacks smart contract abilities at the base layer, this limits what can be done on the chain. Just like Ethereum, there are limitations.
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Interoperability solves much of the problem by moving activity to where it is best served. DeFi is making a lot of noise because the trust is generated by the coding in the smart contract. Obviously, this is something that will not be present on Hive. Nevertheless, when it comes to a gaming application, Hive could be a much better solution.
Presently, the overall transaction numbers for the blockchain world are rather small. The site blocktivity.info has roughly 100 million transactions per day listed on the chains it follows. Again, compared to a Visa, this is nothing.
As this number grows, other chains could find itself in a similar situation. EOS, for example, has the most traffic, the majority of it bots. However, if that does get some applications with a lot of genuine traffic, the price of RAM could escalate just like it did a couple years ago.
Data decentralization is a process that is already happening. How quickly it moves remains to be seen. However, it is unlikely that any of this is going away. Thus, over the next few years, we will see the number of transactions growing, meaning more bandwidth will be required. Either individual chains start solving the scaling issue or applications start to develop the ability to operate cross-chain to meet all their needs.
In the future, a great deal of the choice that coders make could be based upon who has bandwidth. We are in a world of instant results, negating the desire for people to have to way hours for a transaction to complete.
Technology's natural path is greater capabilities for less cost. If transaction fees are going up, that is operating in a reverse manner. Cryptocurrency presented an alternative to the banking system because it offered faster times for less money. If this is being negated, then people will look elsewhere.
In the end, a great deal of this will be figured out. It is likely that Ethereum does make the switch in due time which will allow scaling. However, in the meantime, there are opportunities for other developments to step up and fill the gap.
Another tendency with technology, the early days are usually the hardest. It takes time to work through all the obstacles that arise.
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Blockchain consensus mechanisms come with a trilemma whereby you only get to pick two out of decentralization, security and scalability. Different consensus mechanisms emphasize the three in different ways. Bitcoin and Ethereum both use Proof-of-Work, which sacrifices scalability for decentralization and security. PoW is not just some primitive consensus mechanism which can and will inevitably be replaced by Proof-of-Stake or some variant of it such as DPoS. I believe using PoW is the very reason Bitcoin can be as massively valuable as it is. Also, it helps Ethereum attract applications involving high-value contracts that it is very decentralized and uses PoW.
I think Ethereum is best suited for high-value contracts that require a high-level of security simply because any less security would create incentives for an attack against the consensus mechanism. But as you write, Ethereum can be used as a source of deep liquidity for projects mainly using other, higher-throughput chains through cross-chain bridges.
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Ethereum has been hacked.
Bitcoin has never been hacked.
As far as I know, there was a situation in the early days of Bitcoin when there was a vulnerability to be exploited but the devs fixed it before anyone could do it.
Since hive lacks smart contract abilities at the base layer and ethreum lacks scalability and super processing power I believe we can see a future where blockchain can recognise their strength and weaknesses and well work on helping each other out, I don't it's just a hypothetical opinion here anyways. I do believe if it's to do better than most of the financial system we have currently. But then like you said, the early days are the hardest.
Quality post again today
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Certainly applications are going to have to consider their users and what they are offering. As was mentioned, those apps that deal with larger, more valuable transactions, could operate on Ethereum with no problem. For those at the lower end of the spectrum, other options will be sought out.
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$30 dollars in gas fees is unsustainable. Makes me appreciate the zero fees here on the Hive eco. If I was doing the similar transactions on Eth that I do here my crypto stack would be non existent.
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For low-value applications $30 gas fees are completely unsustainable. However, for high-value transactions such fees can be acceptable if needed security is gained in exchange.
Yeah a $25,000 trade does not really care about $30 in gas fees.
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Yeah, Vitalik has already commented on how even after the current scaling plans are implemented the fee may stabilize near where it currently is, or higher.
I think people forget why the fees are so high- Ethereum is over capacity- there are more people trying to transact than can. Demand greater than supply. This causes a bidding war to get your transaction added. So, if everyone decided they were willing to pay $30.... the fee wouldnt be $30. It would go up until people are priced out. Same in reverse - if people weren't willing to pay the fee it would drop until they were (or demand got below supply, in which case it would plummet back to pennies).
So while ETH has plans to scale, which will temporarily lower fees... the idea is that would onboard new users and uses. Until you rehit the wall, and fees reenter bidding war.
So that's where the layer-2s come in. You can make temporary tradeoffs of security and decentralization to get cheap scalability before bulk confirming on the base layer. Similiar concept to temporarily sending your coins to a centralized exchange for a trade before pulling back out- except that layer-2s aren't making nearly the same level of compromise.
Then of course you have interoperability that @taskmaster4450le likes to write about. This provides a... layer-3? layer-0? What would be a good symbol to use for layer-Emergent? The cryptosphere itself provides an antifragile ecosystem for us to operate in.
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There are plenty of chains already in existence with much lower fees than on Ethereum. I've been a believer in cross-chain apps for years. It seems that that vision is finally coming to fruition, which is absolutely great for the network effects in the space. Blockchain tribalism is very harmful and should be done away with.
While Bitcoin and Ethereum where the pioneers and the brothers that would fight from time to time, that doesn't mean necessarily that they will be the ones that will last. I still would expect for Ethereum to lead the way, but only if they can solve the fees problem with switching to new model. Beside this, they still hold the power over all the other blockchains.
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BEER.Make me think if blogging platform created on top of Ethereum and each operation cost $30 (write, comment, upvote, reblog and edit etc.) then what will happen.
I think it's developer dilemma whether they should build in other blockchain or not because Ethereum attract masses despite it's transaction capability come into question many time. Until they develop confidence in other blockchain they will still flock to Ethereum.
Nobody would use that blogging system. Perhaps somebody might build it now hoping that future Eth enhancements will bring the gas fees down to a point where the fees are low enough for people to blog. I don't think so though. As others have mentioned a layer two solution is going to be a better approach. I guess, right now you can sorta roll your own: blog here on leofinance, wrap your LEO/HIVE to wLEO and wHIVE, then use uniswap to exchange for wETH, unwrap that to ETH. On a side note, the fact we think such a chain of operations is straightforward is why normies hate us.
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yes. Alot of new things will roll on future.
Companies with money will step in and fund the devs to solve this issue. Guess who has the money.
Banks have it and they'll solve the problem. And most people like centralization. We raised and trained that way.
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Vitalik on day say well, hive i do not forget you, we hope he give us an support to publicity our lovely and great hive blockchain, right now he are in the proyect to building the ETH 2.0 that maybe has the solutión to the problem they have in this moment.
well this guy its an guru in the blockchain world, and he know what he doing.
Have a great day.
Well
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But, but, but wasn't the Ethereum Virtual Machine going to be the end all?
I've seen people talking about 'exit scam', not literally though, I don't think, more metaphorically, I think, basically insinuating the boy is finished.
Does that guy ever eat?
For high value applications where the real money is, security and a trusted track record is more important than speed and scalability.
For games and social interaction Hive is the best but I wouldn't use it for very large $ after what happened with Yuchen Sun. dPOS is vulnerable in a way that large scale POW is not.
Ethereum's move to dPOS has been "soon" for as long as SMTs have been soon on Steem/Hive.
@taskmaster4450le I in-courage you to look into #Verus. From what I have read it seems it can solve many of the issues surrounding existing blockchains. There is a lot which is beyond my understanding, yet my gut feels good about it. I would value your opinion.
Here is a starting point for research if you care to look: https://medium.com/@CryptoFin/verus-superior-defi-for-community-driven-liquidity-e2592b251146
Namaste
Atma
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