Ethereum co-founder and main spokesperson Vitalik Buterin has admitted that the ETH blockchain is “nearly unusable for many classes of applications,” urging developers to focus on Layer Two” (L2) solutions instead. His comments were a tacit confession to something many have said for a long time—Ethereum can’t scale. It’s a sign the time is ripe for sensible developers to start looking at blockchains that can, like Bitcoin SV (BSV).
Base-layer scalability for ETH applications can supposedly only happen with the last major phase of Ethereum 2.0, “which is still years away,” he said.
Ethereum 2.0 is a long-awaited “upgrade” to the network that fundamentally changes its protocol rules and economic incentives. The most substantial of these is moving from the current proof-of-work processing model to a proof-of-stake algorithm—itself an economically questionable model that, even if the code itself functions as specified, only creates more long-term uncertainty. Many lawyers have already opined that proof-of-stake changes ETH’s legal status to being an illegal security issuance, in addition to it completely changing the security model by centralizing all control into the hands of Vitalik and friends who premined their ETH stash. But until ETH 2.0 becomes a reality at some undetermined future point, Ethereum’s scaling problems are very real today.
Notably, Buterin posted his comments at the conclusion of the CoinGeek Live event that took place in New York City and London last week. It’s impossible to know if that’s a coincidence or if Buterin was watching the event livestream—though given the importance of the scaling issue and his reputational stake in its outcome, he at least should have been.
Want to scale Ethereum? Use BSV
Meanwhile, Xiaohui Liu, founder of BSV contracts platform sCrypt, has proposed a novel solution to scale Ethereum today: by “storing its global state in a single contract on Bitcoin.”
The reasons for this, he said, are:
– It is validated by Bitcoin miners using Proof of Work and thus more secure than ETH 2.0’s Layer-2 approach.
– It is two or more orders of magnitudes cheaper.
– It is unboundedly scalable.
– It works today.
Though Liu referred to this option as a “pragmatic way to solve Ethereum’s well-known scalability issue,” he wasn’t suggesting this should actually happen. The point is that it can. Since it would be irrational to use a blockchain like BSV as an L2 solution to one designed specifically to run contracts and DApps (like Ethereum), the far better option for developers is to start porting their applications to BSV—yesterday. Those in Bitcoin know this is well underway with applications build by Kronoverse, Kompany and slew of others abandoning Ethereum for the only public blockchain protocol that scales now, BSV.
Vitalik: no scalability for ETH in its current form
As well as a lack of processing capacity that clogs the network, Ethereum has a problem with fees that rise to unaffordable levels when there’s a lot of traffic.
Posting on the Ethereum Magicians forum at the start of October 2020, Buterin said:
“The L1 is nearly unusable for many classes of applications, and there’s no non-L2 path that can get us to scalability in the short-to-medium term. The $17.76 in fees it took me to make a bet on Augur last week itself makes present-day Augur very much ‘for the niche people and not for the world.'”
Generally, “Layer One,” or L1, refers to processes that run natively on a blockchain, while “Layer Two” (L2) moves those processes to off-chain platforms, settling their results at some later point on the main chain. Speaking of things that can’t scale, the best-known example of this would be sending a transaction natively on BTC (L1) versus sending one using the L2 Lightning Network.
“The eth2 roadmap offers scalability, and the earlier phases of eth2 are approaching quickly, but base-layer scalability for applications is only coming as the last major phase of eth2, which is still years away.”
“Today, Ethereum has ~15 TPS” (transactions per second), he said. (Note that’s only slightly more than double that of BTC, which is notoriously limited in capacity). Meanwhile BSV has reached a peak of over 2,800 TPS in production and over 5,800 on the Staging Test Net.
L2 platforms offer the only real solution until Ethereum can supposedly scale, Buterin wrote. He stressed the need for such L2 solutions to conform to certain standards to ensure interoperability.
“Currently, users have accounts on L1, ENS names on L1, applications live entirely on L1, etc. All of this is going to have to change. We would need to adapt to a world where users have their primary accounts, balances, assets, etc entirely inside an L2.”
He described moving contracts to L2 as “phase 1.5,” with processes that would eventually be rolled in to ETH 2.0. At the end of the day though, even if these L2 “solutions” on Ethereum actually work, they’re technically workarounds for developers to continue using Ethereum—when the very reason they chose to develop on ETH in the first place was its supposed ability to run contracts and DApps. Why go through all this trouble?
For years now, some Ethereum project coordinators have quietly admitted in conversation that Ethereum has scaling issues—usually while remaining confident its protocol developers would “work it out somehow.” That confidence has recently begun to slip. A couple of years is a long time in technology; more than enough time for feasible alternatives to emerge. Third-party builders themselves can’t afford to lose time either as they try to be the first to market with their blockchain based application. It’s time to just bite the bullet and port to something that works right now, or potentially waste time and money they can’t afford by continuing to develop on a dying hobby platform.
L1 vs. L2 in Bitcoin—why it’s different
There are also discussions in Bitcoin—namely in the tokenization sector—about whether Layer One (L1) or Layer Two (L2) solutions are more workable. However in Bitcoin the concern is not scalability, it’s more due to developers’ technical capabilities and end-user experience.
Bitcoin BSV is perfectly capable of handling any process written in Script on L1 at any scale. Additionally, it can do so without fees becoming unaffordable, and has base protocol rules “set in stone” so builders can be assured their code will function the same way, years into the future.
Sure, BSV could work as an L2 solution for ETH apps. But why bother? It would be far more beneficial to start porting those Ethereum contracts and DApps to BSV as soon as possible.
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