There’s growing concern that Ethereum cannot handle anymore dApps – but founder Vitalik Buterin says he’s close to fixing the scalability issues.
Afri Schoedon, part of the Parity wallet development team, recently urged new decentralized app (dApp) projects away from Ethereum.
“Please stop deploying [dApps] to Ethereum,” Schoedon wrote . “We are running at capacity.”
Schoedon then declared a need to “meta-decentralize” Ethereum. The approach would involve deploying critical parts of dApps on Ethereum’s mainnet, and running the rest of the necessary processes on a compatible blockchain platform – like Ethereum Classic.
Ethereum founder and Russian boy-wonder, Vitalik Buterin, has disagreed, claiming that Ethereum is not at capacity (technologically) – because it might soon be able to “mass validate” 500 transactions per second.
For the record, Ethereum is currently handling of up to 15 to 20 transactions per second.
“Disagree. Most dApps have lots of room to gas-optimize, and even if you don’t, [having] your dApp running raises gas fees and pressures others to gas-optimize,” Buterin explained. “[Transaction] mass-validation via ZK-SNARKs can reduce costs to less than 1,000 gas per transaction, if done well.”
“That’s around 500 transactions per second, on-chain, with all the security guarantees of on-chain.” he declared .
Buterin is keen on using Zero-Knowledge Succinct Non-Interactive Argument of Knowledge – also known as ZK-SNARKs, a kind of mathematical proof.
Blockchain developers have discovered that when using ZK-SNARKs, transactions become anonymous, as they remove the need for either party to share information (such as traceable private keys).
In fact, the privacy provided by ZK-SNARKs is so great that developers built popular altcoin Zcash with the related theory as its bedrock.
But – instead of using them for the privacy functions, Buterin believes he can use ZK-SNARKs to properly scale Ethereum’s network.
Buterin says ZK-SNARKs could represent a 24-fold increase in the efficiency of ETH transactions, and up to 50-fold increase in the efficiency of ERC-20 transactions.
While an Ethereum ZK-SNARK implementation would see those transactions processed on-chain, Buterin has previously declared one million transactions per second completely possible on Ethereum – but only through the use of second layer protocols such as Plasma.
OK – but is Ethereum clogged?
As it stands, Buterin thinks that most of the network is being actually clogged with useless dApps, and that shitty projects need to either become more efficient, or make way for better use-cases.
“All blockchains that are sufficiently mature will be at capacity,” Buterin wrote. “There are plenty of low-value uses, [like FOMO3D, for instance.]”
“So, it’s a fallacy to claim that gas usage [being 100 percent] is equivalent to having no more room [for dApps],” he continued. “Good dApps can kick bad ones out.”
What it would take, though, for a mass exodus of the toxic and an influx of well-oiled, useful dApps – nobody knows. We do know that other blockchains are having similar respectability problems .
It should also be made clear that Ethereum has been at capacity before – and it’s caused major problems. In fact, when CryptoKitties launched in December, its sudden popularity almost brought the blockchain to its knees , revealing undiscovered scalability problems still being addressed today.
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Superstar plastic surgeon buys major South Korean cryptocurrency exchange
Just weeks before regulators decide the fate of domestic initial coin offerings (ICOs), one of South Korea’s largest cryptocurrency exchanges is changing hands.
A consortium led by a superstar plastic surgeon has just bought a controlling stake in Bithumb for $353 million.
Bithumb will now be directly managed by Singapore-based investment group BK Global Consortium, after it purchased a 50-percent stake (plus one share) from its largest shareholder, BTC Holdings Co., Bloomberg reports .
To confuse matters, BK Global is also a major shareholder in BTC Holdings. BK Global have effectively ‘doubled-down’ on its investment, by selling itself enough shares to have direct control over Bithumb.
Running BK is Kim Byung-gun, one of South Korea’s premier plastic surgeons and founder of the BK Plastic Surgery Hospitals, first in Seoul, then Singapore.
Bithumb is currently the second largest cryptocurrency exchange in the world by reported volume , with more BTC flowing through it than global exchange Binance.
It’s worth noting Bithumb does not boast a perfect track record. Just a few months ago, it was dealing with a $31 million loss after hackers laid waste to its operating accounts in a heist lasting hours.
Just months before, it was ordered to cough up $27 million in back-taxes it had failed to pay.
Bithumb is expected to formally change hands in February, some three months after government regulators decide whether to uphold its strict ban on public ICOs.
The government’s top financial regulator warned his parliament of a major fallout if the government lifts its ICO ban – however he did not go into detail of his concerns at the time.
It certainly seems BK Global isn’t afraid.
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After a big year for cryptocurrencies, what’s on the horizon in 2022?
The year 2021 was marked by several major breakthroughs for cryptocurrencies.
For one, new crypto applications like non-fungible tokens (NFTs) gained ground, with sales of these digital assets setting new records at major auction houses. Secondly, Bitcoin made strides towards mainstream acceptance with major websites like Expedia and Microsoft accepting the coin as a means of exchange. Third, in September, El Salvador became the first country in the world to accept bitcoin as legal tender.
There are many more examples of how the market for cryptocurrencies has expanded just in the last year. With this uptick of activity, what’s ahead in 2022 for cryptocurrencies?
We believe there are three main areas where cryptocurrencies will gain steam in the next year: greater acceptance of Bitcoin as a means of payment, increased regulatory scrutiny and a rise in NFT activity.
The embrace of Bitcoin
Understanding what motivates individuals to adopt Bitcoin has been a challenge for researchers. A recent study suggests five main factors contribute to someone’s likelihood of using Bitcoin:
Trust in the system
Online word of mouth
Quality of the web platforms available for transaction
Perceived riskiness of the investment
Expectations about Bitcoin’s performance
Other studies have added more nuances to this argument by considering gender , age and educational level as equally important factors.
The conditions in the crypto space have made it increasingly likely that Bitcoin will become mainstream in the near future.
First, there’s increased activity in online communities like Twitter and Reddit , where even crypto novices can exchange information with seasoned investors to obtain word-of-mouth advice about price predictions and trading strategies.
Second, there has been an explosion of new crypto-exchanges — or trading platforms where one can exchange fiat currency for crypto — and major investments into the technological infrastructure of existing exchanges. These infrastructure investments have expanded access to crypto markets and also piqued the interest of institutional investors.
Institutional involvement, regulatory scrutiny
The last year has seen institutional players like the European Investment Bank (EIB) — the lending arm of the European Union — take a stance on crypto.
In April, the EIB issued a 100 million euro digital bond on the Ethereum blockchain . Goldman Sachs, Banco Santander and Société Générale were also involved in the issuance. Research has pointed to institutional adoption as a turning point for widespread crypto adoption, and it would appear we’re quickly heading there.
Altogether, the increased availability of points of sale that accept Bitcoin as a means of exchange and institutional investment in the space will likely lead to greater acceptance of Bitcoin as a method of payment in 2022.
After cryptocurrencies, decentralized finance (DeFi) is widely regarded as the next frontier in fintech. DeFi provides the opportunity to create decentralized systems that rely on distributed ledger technology to facilitate peer-to-peer loans , create new financial securities like stablecoins or even offer new models of corporate governance .
In the same month, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency of the United States produced a joint statement announcing that they would produce a set of policy directives on crypto.Regulators also appear to be increasingly paying attention. In November, the European Council — the body that defines the political priorities of the European Union — announced its position on the Markets in Crypto Assets (MiCA) framework , which will provide increased regulatory clarity over cryptoassets and DeFi.
Researchers have pointed to a lack of regulation as a major barrier to mainstream crypto acceptance. Increased government oversight, coupled with the move by several countries to consider digital versions of their national currencies, are likely to result in a lot more regulatory activity in 2022.
A rise in NFT activity
The year 2021 brought a new wave of sales of NFTs. An NFT can offer proof of ownership of, for instance, digital art in the same way a physical canvas can offer proof of ownership of a Vincent Van Gogh painting.
Although NFTs began as a way to formalize ownership of digital art, they have since expanded to include other types of digital property , including digital real estate .
Sales of NFTs are setting new records — a recent one raised US$17.1 million at Sotheby’s. As a result, the auction house launched Metaverse , an NFT-only marketplace to facilitate sales of digital works.
As new NFT applications emerge, this space will likely continue to grow in 2022.
Buyer beware
Despite these investment opportunities, we urge crypto investors to be skeptical of claims they read in online communities. At a minimum, crypto enthusiasts must do their due diligence before investing.
What is sure to emerge in 2022 are new frauds and schemes. Take, for instance, the SquidGame crypto that capitalized on the popular Netflix show but was a fraud. Or the fake Banksy NFT that sold for 244,000 British pounds.
Research on the behavior of retail investors has found some are highly susceptible to the “fear of missing out.”
Therefore, it may be difficult to turn down a tip from your hair stylist or your best friend’s cousin on the next hot crypto opportunity. However, crypto investors should educate themselves on the technology and the basics of financial markets if they want to prudently get involved.
Crypto, after all, remains speculative and is not for everyone.
This article by Erica Pimentel , Assistant Professor, Smith School of Business, Queen’s University, Ontario ; Bertrand Malsch , Associate Professor of Accounting, Smith School of Business, Queen’s University, Ontario , and Nathaniel Loh , Junior Fellow of the CPA Ontario Centre for Corporate Reporting and Professionalism, Queen’s University, Ontario , is republished from The Conversation under a Creative Commons license. Read the original article .
