Ethereum is falling into a technical dead end, the more people use it, the faster it will "die"

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Odaily资深作者

2019-09-03 13:17 (UTC+8)

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Ethereum volatility has hit a three-month low, and many other indicators point to it entering a “danger zone.”

AI Summary

Ethereum volatility has hit a three-month low, and many other indicators point to it entering a “danger zone.”

This article comes frombitcoinist, original author: Himadri Saha

Odaily Translator |

Compared with bitcoin, ethereum’s market volatility has hit its lowest point in three months, according to data from Skew Markets, and many other indicators point to ethereum entering a “danger zone.”

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Low volatility means unattractive investment

It is undeniable that the high volatility of cryptocurrency prices has always been criticized, but appropriate volatility is actually completely acceptable to the entire market. Because high volatility encourages "risk takers" to chase higher prices, which in turn leads to considerable investment returns, and low volatility trends mean that traders/investors are interested in making the most of their assets and chasing "exciting things". "not interested.

According to analysis data from Skew Markets, an encryption market analysis service provider, the volatility of Ethereum has hit a new low in the past three months, and its price is expected to reach a (relative) lowest point in history. Skew Markets stated on its official Twitter on September 2:

Unlike Bitcoin's surge this year, Ethereum has only increased by 31.77% this year compared to the same period last year, while the price of Bitcoin has increased by more than 160% during the same period, which means that short-term sell-offs in the market may be triggered, and investors may also suffer Continued price decline.

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Ethereum network activity slows down

As bitcoin and gold grab attention, the two assets have also been recently touted as a “safe haven” during times of global economic uncertainty. Ethereum, by contrast, has been largely ignored, a notion corroborated by data collected by ethereum market analytics platform Etherscan, as the number of on-chain transactions on the ethereum blockchain dropped to 12% in 2017. The level before the monthly bull market.

On the other hand, the mining power of Ethereum has also been hit hard, and it has been struggling since February this year. As shown in the chart below, Ethereum mining hash rate growth is also slowing down.

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Tech dead-end: Ethereum blockchain 'almost full'

According to previous reports, the utilization rate of the Ethereum network has soared to more than 90% recently. According to Vitalik Buterin, the co-founder of Ethereum, a sharp increase in network utilization may lead to increased transaction costs, which is also quite detrimental to users, especially enterprise users.

In an interview with The Star, a major Canadian news outlet, Vitalik Buterin said:

"Ethereum capacity has become a big bottleneck, because the Ethereum blockchain is almost fully loaded. If your business or organization is larger, then if you use Ethereum, not only will the network itself become more congested, but the enterprise will They will also compete with each other for the transaction space. At present, the transaction cost of Ethereum is already very expensive, and network congestion will even increase the transaction price by five times, which will lead to no one willing to join Ethereum.”

Vitalik Buterin believes that the Ethereum network needs to gradually reverse the idea that "every computer needs to verify all transactions" and realize that each computer can only verify a small part of the transactions on the blockchain. Although this may sacrifice security to some extent, it can reduce the cost of expansion by more than a hundred times, so an appropriate compromise is also acceptable.

"Ethereum is a technical dead end. The more people use it, the faster it will die."

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"Boss" has a solution, but will it work?

Recently, Vitalik Buterin participated in a discussion on the Ethereum capacity issue on the Reddit forum. On the issue of the impact of Tether and USDT on Ethereum, Vitalik Buterin explained that the community should carry out social media activities on Twitter and Reddit to promote the increase of gas limit, which can help reduce the pressure on the Ethereum blockchain.

Although Vitalik Buterin's ideas are not guaranteed to change the status quo of the market, he believes that historically, large mining pools have tended to listen to the opinions of the community. Currently the Ethereum network is running at full capacity, and the gas usage per block is limited to 8 million, which is equivalent to 50 billion per day. At the same time, ethereum orphan blocks have fallen sharply to a quarter of their peak in January 2018, and about 40% of miners voted to increase the gas limit, including F2Pool and Sparkpool.