Blockchain Technology
Should Investors Bet On or Against the Ethereum Blockchain In 2022?
A quick technology review of Ethereum and their competition in the fast-paced cryptocurrency market
What comes to your mind when you think of Ethereum? You might think revolutionary, game-changing, and the future of technology.
However, if you have been in the crypto space, different words will pop into your head, such as expensive, unreasonable, and slow.
The NFT craze of 2021 gave rise to vast amounts of traffic on the Ethereum network and resulted in high gas prices.
But since August, the peak of NFT trade volume, interest in Ethereum NFTs has been declining. Transaction fees have also gotten very low.
Could this mean that people are using alternatives to Ethereum, such as other blockchains like Solana and Avalanche?
What's Going On?
Ethereum was the first to the party and therefore had the first-mover advantage. For many years, it was the only player and captured the whole market.
But as of now, people do not hold Ethereum on a pedestal. People ignore the good parts and only focus on the bad.
There are also many other factors to Ethereum’s decline.
Global Conflict
The recent global conflict(the Russia Ukraine conflict) has instilled fear in all of us. Times have become very uncertain, and everyone would all like a little security.
This has resulted in people selling off risky assets like stocks and crypto to purchase stable assets like gold.
Crypto markets have taken a toll because of this. Prices have crashed and don't look like they will recover anytime soon.
While this has affected the whole crypto market, Ethereum has taken the biggest hit. People cannot justify the high prices in such times of uncertainty and are looking into other options.
Layer 2 Solutions(POLYGON)
Polygon is an interoperability and scaling framework for building Ethereum-compatible blockchains. It is essentially a sidechain created to combat Ethereum's faults, such as low speed.
People have flocked to Polygon for the following benefits-
- Building Ethereum Dapps and blockchains are much cheaper on Polygon.
- DeFi, NFT, and gaming apps are faster and much cheaper.
- Minting NFTs is faster and involves near-zero gas fees.
Note: Polygon adoption does not affect Ethereum negatively. It actually makes Ethereum more practical.
A sidechain is a semi-independent blockchain that works in tandem with an associated ‘main chain’ — usually to improve its speed or capabilities.
Solana and Avalanche
These two are on a mission to take down Ethereum. Solana promises faster and cheaper transactions. Solana has also created excellent developer interest. Usually, developers are lazy to switch because they are used to Ethereum's smart contract language — solidity.
But Solana smart contracts, referred to as programs, coded in Rust, C, and C++. The best part is that it is effortless to convert Solidity into Rust with the help of online converters.
Thanks to their low costs, these two blockchains are also changing the game in DeFi and NFTs.
They've basically taken a large chunk of Ethereum’s business. Their market share will only increase from here.
Should Ethereum Bulls Be Worried?
Although Ethereum is receiving aggressive competition, there is nothing to be worried about. Competition is the driver for improvements.
And who knows what will happen after Ethereum 2.0 mainnet launch. We will get a better consensus mechanism in proof of stake. Shard chains will also help better manage load and improve Ethereum's scalability.
In conclusion, there is nothing to worry about. All we can do is wait and watch to see what happens.
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