Ethereum was created in 2013 by Vitalik Buterin with the goal of allowing decentralized apps to be built on the blockchain. Ethereum is now an open-source public service that uses blockchain technology to facilitate smart contracts and cryptocurrency trading securely without a third party.
The rise in popularity of Ethereum has not gone unnoticed. It is currently the 2nd largest cryptocurrency in the world in terms of market cap. A lot of experts predict it will overcome Bitcoin eventually.
However some people will argue that with the rapid advancements of technology happening, Ethereum will soon become obsolete. Right now, it is doing a satisfactory job, but what are the disadvantages of this popular blockchain? Let’s look a little closer.
Scalability is a major issue in cryptocurrency. As a network gains more adoption it has to function with the same performance it once did on a smaller scale. Right now, Ethereum can handle about 5 transactions per second. Some would argue this is not enough to support an entire mass adopted ecosystem. Developers within Ethereum are working to solve this problem. So are thousands of other developers at different companies who have already demonstrated speeds of up to 1 million transactions per second. Which one of these new companies could take Ethereum’s place if they are stagnant for too long?
Another potential downside to Ethereum is their proof of work algorithm. Some people would argue that the vast amount of energy required to run a node on the Ethereum network is unnecessary and alternatives like proof of stake are more efficient. In proof of stake, rewards are giving to participants based on the amount of Ethereum that they hold. Proponents of proof of work will argue that proof of stake is irresponsible and untested, mainly due to the lack of peer review of the code.
One final point to consider is this. Is Ethereum in a price bubble. With so many new projects utilizing the Ethereum blockchain, we have seen lots of new projects with overstated valuations. Anyone can launch an Ethereum based project and raise millions of dollars in today's market, so it seems. With all of these sketchy projects out there, is the value of Ethereum being over estimated? Once the vast majority of these projects fail, will the market re adjust the value of Ethereum as a whole?
All of this analysis is pure speculation and nobody can predict the future. However, it is important to always look at something through a fair and balanced lens. One must analyze the good along with the bad to ensure they are making a good and informed decision. Ethereum is no different.