Scaling problems, flashcrash, fake news about the death of Vitalik Buterin – a lot have happened the last days around the Ethereum platform and resulted in extreme price fluctuations within the last two weeks.
Scaling problems especially during ICO’s
It was discussed already at earlier ICO's in the beginning of May that the Ethereum platform could get scaling/load problems with increasing usage. It was surprising however to have such a high transactional backlog at the youngest Coin Offerings, and that the entire network was affected by this. During the ICO status, it was hardly possible to send any transactions that were not related to the ICO over the network. On the one hand, the Ethereum enthusiasts have been quite happy about the increasing transactions, but on the other hand, the concern occurred because the absolute amount of 300,000 transactions are not sufficient to allow large use cases on the platform in the future.
Ideas and initial approaches have already been implemented, for example the so-called "gas limit" has been adapted on the part of the miners or the large mining pools, and increasingly centralized "off-chain" solutions are being discussed. It is interesting in this context that the Ethereum community has been acting quite homogeneously and fast.
You can find more about the discussion and the “gas limit” here…
Different explanations about the Flash Crash
On 21 June 2017 in the early evening it happened. While bitcoin and other cryptocurrencys were relatively stable throughout the day, Ethereum was struggling with high volatility. After a slide from USD 360 to USD 260 and subsequent recovery to USD 315, the price dropped to USD 13 in a matter of seconds to catch milliseconds at around USD 300 again.
There are various reasons given for this flashcrash
On the one hand, the reasons are presented in the above described scaling problems, problematic settings for miners and in context with the ICO status. On the other hand, there are reports of a million-dollar single ether sale of USD 12.5 million, which sent the price to the basement in combination with triggered stop loss orders. ** Fact is - no matter what reason this flashcrash triggered - the trust was placed on another test.**
Curiosity - proof of life over the own blockchain
Even more curious than the flashcrash is the fact that a Fake News message about the death of co-inventor Vitalik Buterin partly drove down the Ether market price by double-digit percentage points.
This chapter have been also not beneficial for the confidence and the Ether market price though.
Vitalik Buterin found himself forced to send a message via Twitter to stop the rumor that he was killed in an car accident. After the incident, the course took a long time to stabilize again. This incident shows very clearly that the platform is currently still very dependent on a few developers / heads. Perhaps it is also sometimes not useful to put the names of Cryptocurrency's developers as prominently as in Ethereum.
Conclusion: Keep calm and enjoy the ride
We look back at two moving weeks with extreme rushes – mainly down. If you look isolated at the news of the past few weeks, you could actually think that the platform is in extreme trouble and a crash is inevitably imminent. The exciting question, however, is how to define a crash in the area of crypto currentcies and blockchain environments at all. Scaling problems within blockchain platforms are nothing new and should not pose the emerging problems as a failure of the idea itself. I think it is important now that Ethereum is increasing the current number of developers and focusing on solutions !
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Gypsy