Ethereum(Ether) is the world’s second most popular cryptocurrency and a decentralized revolutionary contract platform. While anything can be built on top of Ether, from supply chain tracking systems to decentralized exchanges to digital art marketplaces, Defi Decentralized Finance is currently the most popular option. Every investor must thoroughly comprehend the benefits and drawbacks of Ethereum enterprises. It will aid in making the best financial selection.
There are a couple of features that set Ether apart from other innovative contract platforms.
After Bitcoin, Ethereum is the world’s second most decentralized cryptocurrency. Although specific individuals and groups, like Vitalik Buterin and ConsenSys, wield significant influence over the project, there is no centralized authority with ultimate control.
This is distinct from other innovative contract systems such as NEO or Tron. The issue with these platforms is that a centralized body controls the network. If it came down to it, a transaction could be reversed, or an account might be locked.
Is that a possibility? No. It’s exceedingly unlikely, but not impossible. That is the issue with centralization, and it is for this reason, having a decentralized network like Ether is the most outstanding defence against meddling.
2. A Robust Developer Community
Ether boasts the world’s largest development community, even more, significant than Bitcoin’s. This provides it with a considerable advantage over other protocols.
Blockchain-based cryptocurrencies are still in their early stages, and much work remains to be done to make crypto relevant to the ordinary individual. However, with so many developers, Ether is more likely to be the first project to discover product-market fit, resulting in mass adoption.
When you develop an app on Ether, you can instantly connect it to hundreds of existing protocols. This is referred to as money legos in the Ethereum community. While the video below is a little out of date, it does a decent job of demonstrating how protocols can interact with one another.
As great as Ethereum is, the platform certainly isn’t perfect. Here are three considerable challenges that Ethereum is currently facing.
1. Slow Speeds
Decentralized protocols, as demonstrated by Bitcoin and Ether, are notoriously slow. Bitcoin has an average transaction speed of 7 TPS (Transactions Per Second), while Ether has a transaction speed of 15 TPS. That’s double the speed of Bitcoin, but it’s not nearly enough.
The Ethereum network has recently grown highly crowded due to the rising popularity of Defi, particularly yield farming. As a result, transaction fees spiked to 100x or more normal levels for brief durations, resulting in excessive payments. A simple transaction, for example, could cost $5 to complete, whereas a reasonably sophisticated transaction including an intelligent contract could cost $50 or $100 to execute.
It’s not a big deal if the network gets crowded for a day or two. However, it has been facing high traffic and high costs for more than a month as of October 2020. People may find it uneconomical to continue utilizing the platform as a result of this.
2. Is Ethereum Immutable?
In 2016, when Ethereum was still in its early stages, a hacker could exploit a weakness in the MakerDAO smart contract and steal approximately $50 million in ETH.
Rather than allowing this to occur, the Ethereum community chose to fork the network to “undo” the attack. While that happened about a half-decade ago, the intriguing question is if it could be repeated. And the answer is ‘most likely’ no. Ethereum has expanded much since then, and convincing all prominent actors to agree to a rollback would be far more complex.
However, to varying degrees, this reversal lingers on in everyone’s memory. The topic of how immutable Ethereum is remained unanswered, especially when compared to a cryptocurrency like Bitcoin.
3. The Programming Language
Robustness is required for developers who want to construct apps and tokens on the Ethereum network. This is a brand-new programming language with some well-known issues.