Ethereum Scalability Concern

Crypto folks, how concerned are you about the scalability of Ethereum and the proposed Ethereum 2.0 ‘sharding’ to split up transaction verification? Here is recent Bloomberg press coverage about concern over Ethereum’s scalability. (If any of the Academy courses cover this, please share which course & section).

That was the warning last week from Ethereum co-founder Vitalik Buterin, who noted that the cost of processing transactions done in the digital token Ether on the underlying blockchain may get too expensive for some users. Ether’s network utilization has spiked into the 90% level, according to tracker Etherscan.io.

Some developers are staying away from Ethereum for now, waiting for it to tweak its technology to increase network capacity, said Jeff Dorman, chief investment officer at Arca, a Los Angeles-based asset manager that invests in cryptocurrencies and other digital tokens. “So the biggest implication today is simply that developers may be incentivized to wait until this transition happens before fully committing to build on Ethereum,” Dorman said. “Tether isn’t helping.”

Ethereum is still working to figure out how to get to its ambitious vision of Ethereum 2.0 – requiring a major overhaul of its technology that some worry may not even work.

While Ethereum currently employs computers called miners to verify transactions – a setup Bitcoin uses as well – it’s moving to so-called staking, a completely different way of verifying transactions. Techniques such as sharding, in which certain groups of computers keeping track of only certain transactions versus all transactions on the network – should help as well. But this technological transition “is not a guarantee and is still on the horizon,” Dorman said.

“The Ethereum blockchain has been ‘almost full for years,”’ Buterin said in an email to Bloomberg. “I think it’s still good to develop apps, but anything substantial should be developed with scalability techniques in mind, so that it can survive higher transaction fees that would come with further growing demand for Ethereum. In the longer term, Ethereum 2.0’s sharding will of course fix these issues.”

Bloomberg News: Ethereum ‘Almost Full’ as Controversial Coin Gobbles Up Capacity