In any economic sector, a hike in the cost of operation and cost of doing business in that particular sector will end up bringing its potential down. It also has a resultant effect of making investors and prospective traders shun away from that industry or sector. The crypto industry is no different, as the Ethereum team are fast realizing.
The increased transaction cost on the Ethereum blockchain is hurting the software’s adoption, according to project creator Vitalik Buterin.
While speaking with the Toronto Star this week, Butertin has opined that projects that are considering whether to build on the technology will likely be counted out as the blockchain is now overburdened with transactions, or in his words “almost full.” (While a blockchain cannot ever be technically ‘full,’ Buterin’s comments indicate his current sentiment on the severity of the problem.)
Altogether, Buterin’s comments reveal his understanding of the difficulties ahead for the project, with major planned upgrades including Ethereum 2.0 and a switch to a proof-of-stake consensus that is ahead.
The newspaper quotes him as saying: “If you’re a bigger organization, the calculus is that if we join, it will not only be fuller, but we will be competing with everyone for transaction space. It’s already costly, and it will be even five times more costly owing wof us. There is pressure keeping people from joining, but improvements in scalability can do a lot in improving that.”
Ethereum’s seven-day transaction fee average, a measure of demand on the network, actually sits at a 50-day low, falling since July 1 to sit around 0.11 ether per transaction currently.
Buterin, following past arguments and his current work, presented PoS as a potential solution to the problem, stating that altering transaction verification could lower fees by a factor of 100 per transaction, freeing space for organizations to build on the blockchain.
More broadly, the comments show how public adoption of ethereum is a growing concern.
Earlier this month, the Enterprise Ethereum Alliance (EEA) appointed the Ethereum Foundation’s Aya Miyaguchi head of its Mainnet Initiative, a working group to connect enterprises with Ethereum’s services.
Discussing governance and adoption, Buterin said price volatility and cybersecurity remain leading issues as well. He concluded that the government has a role in regulating the space:
“Governments do have a role and including regulation. The usual concerns are about cryptocurrency exchanges where the basic idea is to do fundraising for a new project by directly selling tokens on the blockchains. There are debates whether specific kinds of ICOs [initial coin offerings] are legally categorized as securities.”
Buterin pointed toward low-risk uses of blockchain, such as identification of certifications, as adoption-leading technology.