Ethereum gained a lot of popularity in these past few months and with that popularity gave rise to a substantial amount of criticism. Ethereum, at the time of writing, equals US$ 220.44 and it’s market cap at US$ 22,487,605,012, according to CoinMarketCap.
With Ethereum being the second most popular cryptocurrency out there after bitcoin, it only makes sense for it to face criticism. However, it’s important to know where these criticism comes from and think of how it can improve the situation.
The majority of the criticism aimed at Ethereum is valid, but there are always two sides to every coin. Some of the critique are neither supported by facts nor takes any of the many technological advancements that are currently a work-in-progress into account.
Criticism 1: Smart Contracts are not secure
Smart contracts are very immutable and therefore pose an inherently great amount of risk. On top of that, smart contracts currently don’t have a formal verification. This is an issue when you think about the potential applications that run on smart contracts have to handle millions of dollars. This can be solved if the formally verifiable Ethereum Virtual Machine (EVM) compatible languages are implemented. An advanced, Scala implementation called AxLang is one such initiative that can verify smart contracts formally.
The other side of the coin states that while there is some truth to this, it wouldn’t be able to justify the depreciation Ethereum faced against the other cryptocurrencies. Ethereum has gotten better than bitcoin in smart contracts ever since a GHOST protocol enabled 15 second block time. This allowed people not to use Ethereum’s smart contracts while still giving them an advantage over using bitcoins. On top of that, simple and smart contracts like ERC20 tokens are considered highly secure. This means that people can use the smart contracts all the while enjoying the security better than any other cryptocurrency could offer along with greater functionality.
There are even more smart contracts providing high security out there. This completely negates the comment about the insecurities of complex smart contracts being an inherent property. The vulnerabilities of smart contracts will disappear because of the cumulative effect of technological progress.
Criticism 2: The Scaling Conundrum
The majority of the people are aware of the issues related to the scalability of Ethereum and other platforms. There are some solutions to this currently being worked out. Some of them include Loom Network which is a Layer 2 scaling solution, Plasma which is a technique for conducting off-chain transactions and even sharding which is a technique where you can partition an extensive database or blockchain into smaller, faster, more easily managed parts called data shards.
It’s imperative to note that implementing such a solution on an existing platform is extremely difficult. People are working on these solutions. On top of that, if any platform were to reach real scalability all the while keeping the security and decentralization intact, it will be Ethereum.
Most of the criticisms of Ethereum as a world-decentralized computer emerged from the idea that Ethereum won’t be capable of reaching mass scalability. If this is true, then Ethereum’s value proposition will be significantly affected negatively.
The other side of the coin states that Ethereum currently has the same scalability limitations as any permissionless and decentralized public blockchain. None of the other cryptocurrency projects have received as much work for decentralized scalability as Ethereum did. Hence, a comparative analysis would place Ethereum much more favorably among cryptocurrencies. Additionally, with Layer 2 sidechain from live scaling solution such as Loom and open source framework like the POA network, Ethereum already has reduced decentralization, high scalability, and flexibility. These can make any scalability claims made by less decentralized Ethereum competitors meet their match while still providing interoperability to the Ethereum main net.
Criticism 3: The non-existence of active Dapps and people not using Ethereum as its intended
The number of active users is incredibly low when you look at the list of active Dapps. CryptoKitty proved that Ethereum is not ready for mass adoption yet. This means that currently, nobody is going to invest a massive sum of money and time into developing a potential mass-adoption Dapps. This is especially true considering the current security and scalability issues associated with Ethereum. It’s very likely that the potential mass-adoption Dapps on Ethereum won’t happen until the security and scalability issues are completely resolved.
The other side of the coin states that the non-Dapps usage of Ethereum exceeds far higher than other decentralized public blockchains. In other words, Ethereum still has the better value proposition compared to other cryptocurrencies even if you do take Dapps out of the equation.
If you think about it, simple, smart contracts like ERC20 token contracts can be technically considered as Dapps. They are also one of the widely used contracts too. ERC20 tokens make up 93 out of the top 100 tokens by market capitalization on the Ethereum platform. This means that every other blockchain gets a significant decisive network effect disadvantage over the Ethereum platform. Token transactions constitute the majority of increased shares of Ethereum transactions. This shows how market standardization around Ethereum smart contracts is providing activity onto the platform.
These three criticisms clearly show that there are two sides to every coin. There are valid and invalid criticisms out there, and it’s based on your perspective on the matter. Ethereum is arguably the second most popular cryptocurrency after Bitcoin, and anything that’s popular is criticized extensively. There are even criticisms of Ethereum’s privacy, growth and even more on its scalability and security. There are some that say the technology hasn’t matured yet while others say the opposite and both sides offer some truth to the matter.
Ethereum is capable of great innovation, and many of the brightest minds have even talked about the potential of Ethereum.