Ethereum was set to take the world by storm. But is it living up to its full potential? We hear about the ‘new Ethereum’ from the likes of Stellar and NEO all the time – what’s wrong with the old one?
And what does Ethereum need to do to blast past Bitcoin, put these pretenders in their place and settle the argument for good: King of the dApps and the blockchain of choice?
The answer lies in the Ethereum ecosystem, rather than the Ether token. Ethereum is smarter, slicker and more talented than the Bitcoin protocol. Smart contracts and dApps could form a whole new internet and Ethereum is waiting for the world to catch up with the concept.
Big business is starting to create applications that are built on the Ethereum blockchain, or interact with it. It’s hard to believe that Vitalik Buterin built this decentralized network when he was just 19 and teams of engineers are still looking at it and scratching their heads four years later.
Unless smart contracts are really on the way for Bitcoin, it’s all about transactions, while Ethereum is much more nuanced.
Everything from finance and crypto-related activity through to gaming and advanced payment systems is already out there. So what are the big changes – both technical and in the business model – that could send Ethereum through the roof?
1. Proof of Stake Validation
Proof-of-Work is an outdated concept that badly needs an upgrade. The new Casper FFG isn’t quite it, but it is a large security upgrade and a step in the right direction. It doesn’t replace mining completely, it just shifts power and earnings to the validators.
The hybrid version of Casper is an interim step, but Buterin is looking forward to a day when Proof of Work falls by the wayside and this cheaper, faster system takes its place.
Bitcoin’s big problem is the transaction fees and the time it takes to process. Ethereum is looking to slash the cost of a transaction and make a usable system.
The simple truth is that the transaction fee algorithms, protocol alignment centers and mining processes have to be more efficient. Cheaper and faster transactions will lead to widespread adoption and bring the blockchain to the real world, rather than simply the investing space.
This goes beyond Proof-of-Stake validation, but that’s a strong starting point.
2. Better dApps
On our phones, most of us simply want a system that works and the apps we like. It’s the same on the blockchain and its dApps are the key to its success.
We get lost in a world of token pricing, investment, bulls and bears. At the heart of crypto, though, is functionality. Ethereum wasn’t built to make money, it was built to change the world. The former is simply a happy by-product of the latter.
Right now there are far more Ethereum-based apps than people realize and you can do everything from buying art to licensing music and photos. The smart contracts mean that we can achieve complex deals without any human involvement.
An Ethereum-based work contract, for instance, could take trust out of the equation entirely. If the contract itself secures the initial funds and pays on completion of work, then workers will always get paid and the work will be monitored. That takes a layer of middle management and human greed and laziness out of the payment chain.
Right now, there are more than 40 dApps that are available in the Apple and Google Play stores. But we need a landscape of thousands and they need to improve and make full use of Ethereum’s outstanding talents. Right now, that simply isn’t the case.
3. Greater availability of Ether
The fact is that the public don’t spend their time on cryptocurrency exchanges. They don’t need to know they’re on the blockchain, but a high-profile cryptocurrency that people could physically buy, could change the public’s relationship with the whole crypto environment. Buterin believes we should be able to buy a prepaid card at any convenience store and that day is almost certainly coming.
Whole cryptocurrencies have been created around the concept of bridging the gap between fiat and cryptocurrencies. The concept of walking into a shop and buying crypto as easily as phone credit is an enticing one that will take Ether, and the framework it’s built on, into the mainstream.
Once Ether is available in stores, it becomes an international currency in its own right and that turns it into a more practical payment option for multinational companies. Inevitably, they will have to accept fiat currencies, but the frictionless nature of an Ether payment could lead to discounts that tempt the public into mass adoption.
4. Mass adoption beyond the crypto ecosystem
And speaking of… human beings are herd animals and the blockchain is new and scary. Simply put, the vast majority of individuals, companies and even governments want others to take the risk and make the mistakes on their behalf.
When the blockchain is out there, working flawlessly, there will be a rush. Estonia and Dubai are pioneers that are leading the way. Australia has now signed up with IBM to create blockchain services and the corporate world is catching up.
The blockchain is gaining momentum, but the different protocols are still carving up a fresh market between themselves. Ethereum is perfectly positioned, but the crypto world is so new that it wouldn’t take much to tip the balance against it.
Just as cryptocurency itself needs to achieve critical mass, Ethereum needs to do the same. A simple PR campaign could be the difference between domination and death at this point, which brings us to the last point…
5. A buoyant social network
Facebook didn’t exactly drive the internet, but it has become an outsized force. Now, though, an ugly censorship row just will not go away – and Facebook suddenly faces a world in which #DeleteFacebook has memed its way into the public consciousness.
Could the time be right for Minds (or another, similar social network) to take over? We think it could be, and that would help take Ethereum to a whole new level. If the social network is built on Ethereum, it’s a pretty small step to promoting it to the masses.
Minds launched in 2015 and has just 1 million users compared to Facebook’s 2 billion, but it does have some clear advantages. As well as pledging not to censor political views, Minds also wants to pay its users for their contribution.
Right now, the tokens can’t be exchanged and can only be used to buy shares, but the framework is in place to pay for you for time on social media. A Patreon-style tipping system is also in place and there’s a lot to like about Minds.
Minds runs on… Ethereum.
Ethereum will continue to evolve, the smart contracts will get better and the current breed of developers will learn to use this outstanding new tool. As they do, the public, big business and governments will learn to accept it. The blockchain will gain legitimacy, technical excellence, flexibility and exposure. If Ethereum stays on its current course, and incorporates these changes, it could be the horse to bet on.
The author is not currently invested in any digital currency