The most significant limitation of Ethereum – like with Bitcoin – is its scalability, which, as with Bitcoin, is hard to achieve without sacrificing decentralisation or security,
Fiat currency achieves security and scalability but sacrifices decentralisation to do so. In contrast, Bitcoin achieves decentralisation and security but sacrifices scalability to do so. At the moment it’s a similar story with Ethereum, while its critics also point to its founder as a point of failure, along with a lack of clarity over its total supply.
When Ethereum launched, it was seen as an upgraded version of Bitcoin not just because it made DApps possible, but also because it upgraded the number of transactions that could be processed per second.
This lent more scalability to the platform, but it’s still constrained. Bitcoin can handle around 5 transactions per second, whereas Ethereum can handle about 30. Compare this with a platform like VISA that can run 50,000 per second, and we can see the current limitations of cryptocurrencies.
This limitation of Ethereum, coupled with its ability to empower developers to produce DApps, led to the rise of the ICO ecosystem. An ICO – initial coin offering – initially funded Ethereum; inspiring many developers to raise funds similarly.
Many promised things that they couldn’t deliver on the current Ethereum platform. Thus, the resulting ICO frenzy where teams raised lots of money but often failed to deliver on their promises.
How then, can Ethereum be claiming to be a ‘world computer’? If it can’t scale, surely it can’t compete?
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