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What does the future of Ethereum look like? – Still the number 1 for dApps?



What is Ethereum?

Ethereum is a blockchain network founded in 2015. It was the first platform to offer intelligent smart contracts. As a result, Ethereum Blockchain could become the basis of decentralized applications. Etherum's network token is ether. 



Ethereum

Ethereum quickly established itself as the second largest cryptocurrency behind Bitcoin. The Ethereum network has grown massively in recent years, particularly due to the growth markets DeFi and NFTs. The price of the Ether token surged above $4,000 in the last year. 


What problems will Ethereum face in the future?

Ethereum has established itself as the number 1 smart contract platform. This was mainly due to the fact that Ethereum was the first to offer smart contract functions. If you want to develop a decentralized app, the first place to go is the Ethereum blockchain. Nevertheless, Ethereum has had to struggle with some problems in recent years.


Transaction costs in particular have risen again and again in recent years. Ethereum 's high gas fees became a major problem for the platform. This is mainly due to the fact that Ethereum, like the Bitcoin blockchain , uses the proof-of-work consensus mechanism . Transactions are verified by Ethereum Mining


Why are Ethereum gas fees so high?

Like Bitcoin, Ethereum has so far used mining and proof-of-work. This consensus mechanism works for Bitcoin. The difficulty of adding new blocks increases with the length of the blockchain. This gives Bitcoin a deflationary nature. This causes the price of bitcoin to increase and it becomes a store of value.


Ethereum gas fees

For Ethereum, this is a disadvantage as the network strives for increased scalability. Therefore, Ethereum had to act and rearrange its consensus mechanism to reduce transaction costs and increase transaction speeds. This is said to happen through Ethereum 2.0 .


What will Ethereum 2.0 bring in the future?

Ethereum 2.0 is the major update of the Ethereum blockchain. The consensus mechanism is to be switched from proof-of-work to proof-of-stake . This is more efficient and ensures that Ethereum can finally reduce its high fees and thus increase its scalability.


Ethereum 2.0 should actually be finally launched in the second quarter of 2022. However, there are delays, so Ethereum 2.0 could only be seen in the third quarter. This gives other blockchains the opportunity to take market share from Ethereum in DeFi and NFTs. 


Ethereum 2.0

Who are Ethereum's future competitors?

Many blockchains are strong competitors of Ethereum. Networks like Cardano, Solana and Avalanche offer better scalability and lower fees, making them increasingly attractive for developers of decentralized applications. 


Ethereum is currently still benefiting from its position as the number 1 smart contract platform. However, the update to Ethereum 2.0 is urgently needed in order to be able to technically keep up with modern blockchains.


The success of Ethereum 2.0 is extremely important for the future importance of Ethereum as a smart contract platform . More and more new blockchains want to compete with Ethereum in the future. However, should Ethereum resolve its fee and scalability issues, Ethereum should secure its place at the top for years to come.

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