Vitalik Buterin: Increasing Transaction Costs Risk Limiting Ethereum Adoption
The increased cost of transacting on the ethereum blockchain is hurting the software’s adoption, says project creator Vitalik Buterin.
Speaking with the Toronto Star this week, Butertin suggested projects that are considering whether to build on the technology will likely be butted out as the blockchain is overloaded with transactions, or in his words “almost full.” (While a blockchain cannot ever be technically ‘full,’ Buterin’s comments indicate his current sentiment on the severity of the problem.)
Still, Buterin’s comments speak to his understanding of the difficulties ahead for the project, with major planned upgrades including Ethereum 2.0 and a switch to proof-of-stake consensus ahead.
He told the newspaper:
“If you’re a bigger organization, the calculus is that if we join, it will not only be more full but we will be competing with everyone for transaction space. It’s already expensive and it will be even five times more expensive because of us. There is pressure keeping people from joining, but improvements in scalability can do a lot in improving that.”
Ethereum’s seven-day transaction fee average, a measure of demand on the network, actually sits at a 50-day low, falling since July 1 to sit around 0.11 ether per transaction currently.
Ethereum’s seven day mean transaction fee image via Coinmetrics
Buterin, following past arguments and his current work, presented PoS as a potential solution to the problem, stating that altering transaction verification could lower fees by a factor of 100 per transaction, freeing space for organizations to build on the blockchain.
More broadly, the comments show how public adoption of ethereum is a growing concern.
Earlier this month, the Enterprise Ethereum Alliance (EEA) appointed the Ethereum Foundation’s Aya Miyaguchi head of its Mainnet Initiative, a working group to connect enterprises with ethereum’s services.
Discussing governance and adoption, Buterin said price volatility and cybersecurity remain leading issues as well. He concluded that the government has a role in regulating the space:
“Governments do have a role and one of the roles in regulation. The usual concerns are about cryptocurrency exchanges where the basic idea is to do fundraising for a new project by directly selling tokens on the blockchains. There are debates whether specific kinds of ICOs [initial coin offerings] are legally categorized as securities.”
Buterin pointed toward low-risk uses of blockchain, such as identification of certifications, as adoption-leading technology.
Vitalik Buterin image via CoinDesk archives