Ether (ETH), the second-largest cryptocurrency by market capitalization, has been stealing the limelight from Bitcoin lately. Ether is the native settlement currency on the Ethereum network, an open-source platform founded in 2013 by Russian-Canadian programmer Vitalik Buterin and a few other crypto entrepreneurs.
Phemex, a major Singapore-based cryptocurrency exchange, is a great option for users to buy Ethereum. The platform even lets users earn interest on ETH deposits, with a team of expert asset managers that offer industry-leading returns. Built by ex-Morgan Stanley veterans, Phemex is a platform built to make finance more accessible through innovative blockchain solutions.
What makes Ethereum unique is that while crypto enthusiasts can trade Ethereum as an investment similar to Bitcoin, it is also a platform for developers to create new applications. These can be designed to make buying, selling, and using cryptocurrency more convenient. This article will focus on the future of Ethereum.
What's in Ethereum's way right now?
There are a few issues Ethereum needs to overcome to achieve market dominance. These include:
Scalability and slow transaction times
Scalability is a significant issue with the Ethereum network. Currently, Ethereum can only process around 15 transactions per second. This is very low compared to payment processors such as Visa, PayPal, and even some other cryptocurrency networks, some of which can handle thousands of transactions per second.
The issue stems from the network's consensus model, Proof-of-Work, which requires each transaction to be verified by every node on the network. As more transactions are made, more nodes are needed to verify them all fast enough. This is being addressed through Ethereum's shift to Proof-of-Stake, which while controversial within the mining community, will almost certainly improve network performance while lowering costs.
High gas fees
Ethereum's high and incredibly volatile gas fees have been a major topic of discussion for the last few years. Gas refers to the cost of processing a network transaction, and every block being validated has an upper limit on how much gas can be accepted.
This limit is imposed since any action on the network requires gas, and no one application should be able to hog resources. However, miners confirming transactions choose transactions with the highest gas fee (reward) first. The rest get pushed to later blocks and sometimes don't get selected at all.
Gas acts like a user's bid for block space, and this dynamic results in expensive network fees with increasing demand for a limited supply. Like network performance, Ethereum's move to Proof-of-Stake and its accompanying change in the validator incentivization model should bring gas fees back down to acceptable levels.
The Ethereum blockchain is only getting bigger, exhibiting a growing footprint across various industries worldwide. However, its use of a less popular coding language and relatively dated programming makes inefficient use of the network's processing power.
This is a problem for businesses that rely on Ethereum smart contracts and could potentially impact its price in the future. Competing platforms like Solana and Avalanche make development much more accessible and have proposed innovative solutions to the blockchain trilemma, making them more attractive to future blockchain-based projects and DApp developers.
That being said, Ethereum is still the dominant platform for distributed applications owing mainly to its massive network of users. Projects will always prefer to launch on the most popular blockchain, and Ethereum doesn't appear like it's giving the title up for the foreseeable future.
Ethereum Roadmap and Recent updates
Ethereum 2.0 promises an efficient proof-of-stake system where nodes are selected to record transactions by an algorithm at random. Chances of selection increase with the amount of the currency the node's owner holds or 'stakes'. This makes it possible to dramatically decrease the complexity of the cryptographic work, leading to massive throughput gains for the whole network.
Another critical component of Ethereum 2.0 is 'sharding', which will increase the efficiency of its resource distribution. By breaking data verification tasks among smaller nodes, each will only need to verify the received data without worrying about the other data bundles. This enables the whole blockchain to process tasks in parallel, which will increase the network's capacity several times over. Ethereum 2.0 is expected to be much faster and more efficient than it currently is.
Ethereum 2.0 will also be using WebAssembly through 'eWASM'. This will make it possible to execute Ethereum code right from a modern web browser and enable developers to choose from more accessible programming languages like Rust, C, and C++ to write code to the blockchain.
What's next for Ethereum?
While Ethereum 2.0 was initially set for a 2019 release, the first phase only managed to launch on 1 December 2020. With two phases still to go, the complete release is estimated to be executed only late into 2023.
The next stage on the Ethereum upgrade roadmap is to merge the mainnet with Ethereum 2.0's Beacon Chain, completing the shift to Proof-of-Stake. This Merge was expected to happen in Q2 2022 but has recently been delayed to Q3. After that, Ethereum shard chains should launch by 2023.
Forbes predicts that Ethereum could reach $19,842 by 2025. Ethereum has its share of drawbacks, but the project has found its foothold in the market over the last few years. If its current run is anything to go by, Ethereum has quite a promising future in store.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.