First, let me say I write this as someone who first bought Ethereum when it was still under $100, and in the years since both ETH and countless ERC20 tokens held a majority share of my crypto portfolio.
I wasn't someone who 'had some' - I was a true supporter, someone who believed the things I was witnessing with smart contracts and the ability for anyone to create a coin on the Ethereum blockchain would be what sends crypto into the mainstream.
For awhile that vision is exactly what seemed to be playing out, but the time has come for everyone who cares about this crypto thing to stop downplaying the disaster that is Ethereum.
Seems I have just discovered how long nostalgia and sentimental value will allow me to pretend everything is okay, because suddenly I cannot avoid seeing just how bad things have become.
Think Of How You Explained Crypto To Your Friends and Family - Ethereum Has Made Liars Of Us All...
When explaining your crypto obsession to friends or family you probably used words like 'fast' and 'low fees' - two things that have not applied to Ethereum in quite some time. Since November 2020 every transaction has been over $1, and for all of 2021 it's been over $10.
Today try to do a trade on Uniswap, and (at the time of publishing) you will see the Ethereum network attempt to charge you a trading fee of $150+ for s simple trade, that's after a $60+ fee just to authorize a coin you hold to be traded in the first place.
If you were to sell $200 worth of Ethereum on a DEX (decentralized exchange) right now - you would receive $0 for it - the entire transaction swallowed up by fees. Yes the exchange's fees are a part of the problem - but the price of using it for trading is absolutely relevant.
Today A New Record Was Set - $69 Average Transaction Fee!
That's simply sending from one wallet to another, a standard person to person payment. If you wanted to send a friend $50, your total cost would be $119.
The #2 cryptocurrency in the world right now is indeed a total disaster.
 |
| Transaction costs today according to Ethercan |
How foolish do we look when it comes down to the basic primary function - sending money from one place to another - tech from the 1970's would outperform Ethereum on both speed and costs.
It's even worse when we consider this is many people's first impression. Crypto is exploding and the first coin someone owns is typically BTC or ETH, often because Bitcoin's already high price intimidates a lot of people.
When I hear that a friend is one of these people making their first crypto purchase I find myself saying 'congrats!' but thinking
'dear god please never let him seriously try to use this for anything more than trading it on the same exchange he bought it on'.
Spending $50 To Send $100 - Which Takes 15 Minutes To Arrive - That's The OPPOSITE Of What Crypto Is Supposed To Be...
There's no valid reason this needs to be happening. I'm going to avoid specifically naming any alternative blockchains because the Ethereum devs at fault will point to that and claim this piece was just 'shilling' for whatever coins I mention - I won't give them that opportunity, Ethereum is the only coin we're discussing here.
Just be aware there's no debate - Ethereum's success is purely based on timing, not performance. There's a fairly long list of alternatives that could easily handle Ethereum's transaction load and keep fees at a price point in 'cents' not dollars. But Ethereum took it's place next to Bitcoin on every chart at a time when it was able to handle the much smaller amount of transactions - and that's some extremely powerful marketing.
Imagine a coin with these specs attempting to launch today, it would attract 0 investors, 0 users, and no one would want their name associated with it.
Ask yourself - how would Ethereum market itself if it was brand new, but had the fees it has today. The images in my mind are hilarious.
People buy it because it's the #2 cryptocurrency - and that helps to keep it the #2 cryptocurrency...
They tell us a solution coming with Ethereum 2.0, and that's true... once it actually happens. Instead, as fees got higher the process of upgrading to 2.0 shifted from something exciting right around the corner, to a sluggish process where things that were 'just around the corner' are now coming 'someday, eventually'.
They say it's because they want to make sure it's safe and secure, which we all want - but that excuse is complete bullsh*t. Qualified developers would be finished with the goals laid out in 2017 by now - and I'm not saying they're unqualified. Knowing what Ethereum's developers are capable of is actually how I arrive at these conclusions. At best they're slacking off, at worst, it's deliberate.
Also worth mentioning - scaling is an issue that if a project is managed correctly, has no effect on the users. If your users are feeling negative effects of your growth, the project is mismanaged. The growth means the project has the resources (money) to solve the scaling.
There's HUNDREDS of coins running on proof-of-stake validation algorithms (a method of processing transactions, aka mining) but Ethereum devs are pretending they are inventing this already existing technology. How likely is it that while they drag their feet they're also mining and grabbing as much of these disgustingly inflated fees as they can for themselves?
Look at this
video we posted in 2019 of Ethereum founder Vitalik talking about Ethereum 2.0 and tell me if you're left with the impression that he's talking about things that still won't be here by mid 2021. Does he come across like he is speaking about an abstract 'rough draft' concept that will take years to become a reality?
We can go back even further and the reality of what's happening becomes crystal clear when you look at the
Ethereum.org page for Eth 2.0 - it now says sharding (which will dramatically increase the amount of transactions processed) has a vague release date of sometime in 2022.
Yet all the way back in 2018 Vitalik was
tweeting '
sharding is coming' and this
Reddit post, also 3+ years old, once again does NOT leave the reader with the impression that we're looking at concepts that still won't be a reality in the middle of 2021.
Another 2018
post made by a developer with the role of 'Building Ethereum 2.0' states
"As the number of transactions on Ethereum keeps going up and up, we have no time to lose. Let’s get started." so we can rule out the possibility that Ethereum's success caught it's developers off guard and they've been scrambling to catch up. Fees were 0.74 cents when this post emphasizing the urgency of providing a solution was made.
There's No Way To Measure The Damage This Is Causing...
The crypto world looks like a joke as long as something considered one of the 'top coins' fails on both price and performance. Bitcoin seems to have fully made the transition to being branded a 'store of value' thus competing with gold - on that note Bitcoin is easier to buy, store, and sell. So an argument can be made that it is the superior choice to gold.
No such argument exists when it comes to Ethereum. It holds a position it no longer deserves.
I explained why I can't name specifics, but alternatives are starting to grow at a surprising rate. One is regularly now passing Ethereum's daily volume, which even shocked me.
After seeing that, my opinion shifted a bit - I was under the impression so much had been built on Ethereum that their position was locked in and it this all amounted to 'tough luck' and the crypto world would just have to ride it out. But we're starting to see tokens deciding to have both an ERC20 version, and one on another faster, lower fee blockchain.
Currently, having an ERC20 token provides easy instant exposure to a huge number of traders, but projects worry the fees may cause someone to wait on buying a coin longer than they typically would.
But with traders a shift is happening fast - those who were once completely focused on coins they could find on Etherdelta/Forkdelta, then Uniswap, no longer limit themselves to the Ethereum blockchain - after doing so for years.
The numbers don't lie - Ethereum's top competitor had 393K wallets created yesterday, beating Etherum by over 100,000 wallets. While some would respond by pointing out many people already have an Ethereum wallet, that doesn't explain how they also did 9X as many transactions.
In Closing...
I believe the current situation is the result of a '
we're untouchable' mindset within Ethereum's core developers - the lack of urgency comes from feeling like theirs no consequences for lagging. I believe if they maintain this mindset for much longer it'll be the mistake that haunts them for the rest of their lives.
It takes a couple high profile projects with ERC20 tokens to officially switch to another blockchain, and receive praise from their users for doing so - and the smaller coins will follow as being on Ethereum officially becomes a 'downside' to more and more people.
A coin switching blockchains could now be seen as freeing their supporters from fees they found slightly annoying at $1-$10, and downright insulting at over $50.
You would be surprised at how much a new project relies on having a high number of people buy small amounts of $500 or less worth of tokens. At Ethereum's current rates I suspect they will lose most purchases of $200 or less, and all purchases from people who would have spent $100 or less.
As someone who one supported Ethereum, I'd love to once again. I strongly suggest those in a position to do so, change anything in their timeline that says 2022 to 2021 and shift your mindset to that of a software company losing customers until your new version is released, once again making your product competitive.
-----------
Author: Ross Davis E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco Newsroom / Breaking Crypto News
