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Rising fees and scaling issues pose a major problem for the Ethereum network, according to key players in the ETH ecosystem and blockchain researchers.
Ethereum transaction fees are too high, with the average transaction fee being $0.46 at press time.
Transaction fee revenue is now nearing half as high as block reward revenue. This actually risks making ethereum *less* secure because of https://t.co/Dase8SL30z. Fee market reform (ie. EIP 1559) fixes this; another reason why that EIP is important. pic.twitter.com/eqU3tAMh67
— vitalik.eth (@VitalikButerin) July 21, 2020
In addition, network congestion is beginning to bottleneck the Ethereum network as well as drive transaction fees even higher than where they currently sit. To add insult to injury, the scaling solution that Ethereum protocol developers claim they need to solve these problems appears to be years away. But this experiment they are attempting to scale ETH is just that, an experiment.
Institutions aren’t interested
“I would caution that it [Ethereum] is not a finished product. We are going to try to switch to Ethereum 2.0, but it’s probably 4 to 5 years away, maybe more, from when Ethereum really is at industrial scale,” said Mike Novogratz, CEO of Galaxy Digital. “We [Galaxy Digital] are seeing no institutional money go into Ethereum, we are seeing crypto money go into Ethereum.”
The Ethereum protocol is constantly changing. It has several network updates scheduled that are meant to improve the network as well as help it scale—the major update being the hard fork to Ethereum 2.0. However, the upgrade has been continually delayed and looks like it is several years away at a minimum.
The scheduled upgrades to its network make it challenging for any enterprise to build its business atop Ethereum, which is unattractive to institutional investors. It’s not possible to build a multi-million dollar business with a protocol that is constantly changing. If the protocol frequently changes, what you built using the protocol last year may be invalid one year down the road.
Why would you build on Ethereum?
Ethereum can’t scale, transaction fees are expensive, and a network bottle-neck similar to the one that took place in December 2017 is on the horizon.
There is no reason to build on Ethereum, especially since Bitcoin (BSV) as originally designed by Dr. Craig S. Wright back in 2009 already scales and can do everything ETH can do and more.
Bitcoin transaction fees are stable and significantly lower than transaction fees on Ethereum. As of press time, the average tx fee on the Bitcoin network is $0.0002. On Bitcoin, there is no block size limit and network throughput has been as high as 6,400 transactions per second. Several enterprises have already built or are currently building their business on Bitcoin because it is cost-effective and stable—two essential elements that enterprises are looking for when implementing a blockchain solution.
DeFi and Ethereum are not ready for mainstream adoption right now – if you are playing with it today you are a pioneer of a new technology.
This is just the simple reality – it will get better over time – don't miss the forest for the trees 🙂
— sassal.eth/acc 🦇🔊 (@sassal0x) July 20, 2020
Anthony Sassano, the co-founder of ethhub.io, says it himself, Ethereum is not ready for mainstream adoption. What enterprise wants to wait 4-5 years to see if the network can figure out a scaling solution? Why would any serious business build their project on Ethereum? No company is willing to gamble on a potential solution that is not in sight, and no serious business would build on Ethereum—it just doesn’t make sense for them to build on a hobby platform when Bitcoin exists.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
