Venture capitalist Fred Wilson once believed that Ethereum would surpass Bitcoin's market capitalization. However, persistent scaling issues are forcing former lawyers to reconsider. Investors seem to agree that ETH is trading at a historic low against BTC.
“Hard to build”
Fred Wilson, co-founder and managing partner of Union Square Ventures, believed that Ether surpass the market capitalization of bitcoins. Now the venture capitalist believes that while the technology underlying Ethereum is at the forefront, there are many unresolved issues with the protocol that impedes its adoption.
“Ethereum, as many of you know, confuses me. He showed the way to many important things; smart contracts, programmable trust computing, potential proofs of participation, and more. But it's still hard to build on the scaling issue, and many developers are looking elsewhere,” Wilson wrote on his blog.
Ethereum is currently struggling with serious difficulties. Blockchain network usage currently exceeds 90 percent, which makes it expensive to run applications and use.
Congestion pretty much starts from 15 ETH transactions per second. Meanwhile, other more centralized protocols, such as EOS and TRON, can process from 25 to 100 transactions per second.
“Many of the most promising and most funded projects are significantly delayed in entering the market. Some of them are that building scalable secure and decentralized protocols is not easy. But it is also true that the decentralized development approach that many of these projects are taking is not well suited to delivery times,” Wilson continued.
It's not solved at all. Even the newer semi-centralized blockchains have GST in the hundreds; AFAIK EOS has already had scalability bottleneck issues.
- Vitalik Non-giver of Ether (@VitalikButerin) August 21
Vitalik Buterin, the head and co-founder of Ethereum, recognized the limitations that could prevent Ethereum from realizing its potential as a widespread “world computer”.
“Scalability is a big bottleneck because the Ethereum blockchain is almost full.
Although Fred Wilson is disappointed that these problems have not yet been resolved, he is still optimistic about the future of technology. According to Buterin, one of the ways to solve all these problems is to introduce Ethereum 2.0.
Ethereum 2.0
Ethereum 2.0 (Serenity) is the most anticipated update on the Ethereum network. It aims to have "millions of transactions per second" processed through second-tier solutions, including Sharding and Plasma.
“If you get 100x from Sharding and 100x from Plasma, these two will give you 10x scalability, which means that [the Ethereum blockchain] will be powerful enough to handle most of the applications that most people try to do, ”explained Vitalik Buterin.
The ability to execute millions of transactions per second would allow Ethereum to take a place where it could eliminate competing protocols and dominate traditional industry competitors such as Visa (which is capable of processing up to 65 000 transactions per second).
Price analysis
So far, the market is skeptical that Ethereum 2.0 will rejuvenate the price of ETH. Since June 26, Ethereum has fallen sharply by 55 percent. But investors may soon get some relief.
The 167 support zone is a critical level for the Ethereum trend. If he cannot hold on, ETH could reach 145 dollars, which will increase the likelihood of a further decline that will return him to 90 dollars, according to Max Keyser, presenter of RT Keizer Report.
However, on the weekly chart there are several bullish signs indicating that ETH is aimed at a significant rise. For example, a serial TD indicator signals that this cryptocurrency may recover soon. ETH is currently above the trend line of the installation, which is a buy signal. Based on this technical index, Ethereum may rise.
This technical form signals a change in price from bearish to bullish. After the breakout, the falling wedge predicts an 38 percent surge, which could lead to ETH reaching 242 dollars. A sharp increase in consumer pressure behind the cryptocurrency will confirm bullish signals, while an increase in sales pressure will invalidate them.
Although high hopes are expected for the next major network update, it remains to be seen whether this will restore its price.
Ethereum's flaws demoralized some of its main proponents, such as Fred Wilson. Meanwhile, Vitalik Buterin remains “convinced” that some problems with the network are starting to be resolved and that there are “no show stoppers” in Ethereum 2.0. If the upcoming updates are truly successful, there is no doubt that the smart contract giant will "really [become] the computer of the world," as Buterin suggested.
In the same vein, Mariano Conti, head of smart contracts at MakerDAO, believes that even if ETH 2.0 is “significantly delayed,” Ethereum is “good enough for decentralized funding in the next three or four years.”