Is Ethereum no longer scalable? According to co-founder Vitalik Buterin, the second-largest cryptocurrency by market cap and the number one competitor to bitcoin is heading in that direction.
Buterin Offers His Take on Ethereum
In a recent interview, Vitalik explained some of the problems he’s encountered as of late with Ethereum’s blockchain, the first being that it’s “almost full.” He also says that Ethereum is among the more expensive types of blockchain technology for businesses looking to build within its network.
This, combined with its lagging scalability as of late, is what’s causing Ethereum to lose out. Many new crypto businesses are unable to garner a spot in the Ethereum network and utilize its properties for business management.
Speaking with the Canadian news outlet The Star, Buterin explains:
Scalability is a big bottleneck because the Ethereum blockchain is almost full. If you’re a bigger organization, the calculus is that if we join, it will not only be extremely full, but we will be competing with everyone [else] for transaction space… There is pressure keeping people from joining, but improvements in scalability can do a lot in improving that.
One of the big issues surrounding bitcoin and other forms of cryptocurrency is regulation. Digital currencies have often sought to prevent major banks and government agencies from controlling them or having a hand in how individuals utilize them. Buterin, on the other hand, sees things very differently. He says that governments should have a say in how cryptocurrencies operate and thinks they can have great power in determining how well the space moves from here.
Among the steps governments can take to ensure cryptocurrencies are safe and properly utilized are regulating initial coin offerings (ICOs) and appropriately deciding which currencies should be classified as securities.
Among the recent tech hubs to become “more comfortable” working with blockchain technology is Microsoft, according to Buterin. The company recently created a system for managing digital identities. Buterin states:
I go and talk to companies and governments quite a bit and institutions are increasingly warming up to public chains. Microsoft would be an example. In some cases, banks. I’m not aware of Canadian banks that are doing active applications on blockchains. I know that historically [Royal Bank of Canada] has had some interest.
Time for Some Solid Change
One of the biggest problems affecting Ethereum, according to its co-founder, is its structure. Right now, that structure is based more on a proof-of-work concept, whereas Buterin believes it could benefit more through a proof-of-stake system. This transition is currently underway, and he says:
The problem with the current blockchain is this idea that every computer has to verify every transaction. If we can move to networks where every computer on average verifies only a small portion of transactions, then it can be done better.