Ethereum, the second most popular blockchain platform after Bitcoin, strives to unlock all the potential in this system that its predecessor missed. The number one cryptocurrency in terms of market capitalization has quite a long way to go to achieve all that Ethereum has realized so far, whether we look at the former’s blockchain’s sustainability (or lack of it), the untapped potential to create a wide breadth of financial services and applications or other aspects that appear to be out of reach for the foreseeable future. Bitcoin is holding on to its energy-consuming proof-of-work mechanism and lags behind in terms of scalability, which are only two aspects that Ethereum has or is on the brink of achieving.
Ethereum started on a multi-phase journey to improve wallet security, scalability, transaction speed and fees through several transitions in the infrastructure. For the moment, it needs to execute three changes to ensure a success story now and in the future, as its co-founder Vitalik Buterin admits. Under the guidance of the well-known programmer, this project is eagerly anticipated and expected to make a lot of noise in the cryptocurrency world, driving up the price of Ethereum.
For Ethereum to transform from an experimental technology into a fully-grown tech stack, it ought to go through a series of transitions that need to occur almost simultaneously, as you will come to acknowledge.
Privacy concerns are drawing more attention
Ethereum began its journey to scalability by implementing roll-ups that boost transaction speed on the network and reduce gas fees marking a significant milestone in the cryptocurrency’s history. The platform’s switch to the proof-of-stake system also stands as proof of Ethereum’s determination to become more eco-friendly and eliminate some of the criticism prevailing in the cryptocurrency world due to problematic, unsustainable practices. With these elements crossed off its to-do list, now it’s about time it directed its attention towards enhancing the network’s privacy, as contrary to popular belief, they don’t keep an incognito profile. Still, they are pseudonymous, given the possibility to track addresses. The anonymity of blockchain transactions is steadily fading, representing a cause of worry for users, with a significant proportion of them moving to centralized systems that may not disclose as much information.
According to Ethereum’s creator, the blockchain’s aspiration to become a leader in computing solutions may be hindered by the lack of anonymity, as making every transaction available for the wide public and anyone to see is a concerning privacy issue that many potential users aren’t willing to commit to. Additionally, the programmer proposes to adopt “stealth addresses” to anonymize transactions by assigning users a one-time address that hides user identity, can only be used once, and then burnt after consumption. However, similar solutions aren’t that probable, as the issues with cost and functionality are yet to be solved.
Ethereum works under a “one user, one address” policy aimed at making processes more straightforward. Still, in the absence of thorough controls, it becomes difficult to ensure that the user is sending money to the intended receiver, allowing for wrongful transactions. Needless to say, it’s more like a double-edged sword. Increased controls can make wallet management more challenging for those using more than one address.
The only path to success is making user experience a top priority
Each company strives to provide users with a seamless experience, as this is among the most effective ways to attract prospective customers, retain a wider client base, and have people spread the word about the related product or service. The same goes for Ethereum, as its co-founder stated. However, checking each transaction on the list can be a challenging endeavor, given the intense coordination that must be realized among the three of them. Each transition feature hinders the “one user, one address” model, potentially complicating how smart contracts execute transactions.
Users may encounter difficulties in several key areas. Extracting payment data may be complicated as settlement information isn’t readily accessible. Changing private keys and managing social recovery may also pose challenges for individuals holding their assets in more wallets across different chains. The shift to wallets with smart contracts is concern-raising because of the characteristics of the user experience when individuals are enabled to manage separate addresses simultaneously.
By establishing a social recovery wallet, the user selects a different entity, be it a trusted friend, third-party, or even a secondary device owned, that will approve a recovery action in case the user loses their access to their wallet. As such, they’ll be able to be offered new private keys and continue to use their wallets. This would e a great achievement, but mainly for those who have friends and family members that use Ethereum.
Ethereum must become more affordable to become a leading computing system
According to Ethereum’s creator, a major problem with Ethereum lies in its exorbitant gas fees. The only way for the Ethereum platform to gain mass adoption and stay on top of the competition is to work on the affordability of transactions and ensure they remain cheap even in the event of a next bull run, which would generally bring the fees up. Ethereum has a problem with the transaction fees because they cost $3.75 at the moment, which is more than a product designed for mass adoption would cost, eventually pushing individuals to use centralized solutions or encourage greater centralization on its blockchain. The purpose of Layer-2 roll-ups is to tackle this problem, and if they’re successfully adopted, gas expenses will eventually decrease and stay up to the mark.
Without embracing these implementations, the network’s growth ability may be hindered, together with its frontrunner position in the DeFi realm. Without succeeding in realizing the proposed goals, Ethereum may only push potential users to resort to more affordable and centralized alternatives.
Ethereum doesn’t only have to ensure it’s not thrown out of business. It has the potential to outclass its competitors and provide long-term, efficient solutions, considering it succeeds in making the three highly-needed transitions that will boost user privacy and wallet security. Privacy, layer-2 scaling, and smart contract wallets are the key concerns that need to be managed to secure Ethereum’s position in the future.