The Ethereum network faces many operational challenges that put the ETHER token at risk
In 2021, Ethereum outperformed major cryptocurrencies like Bitcoin in terms of growth. Although it currently shows no signs of recovering from its recent crash on December 4th, cryptocurrency investors believe Ethereum will make a much better comeback in 2022. Unfortunately, that seems highly unlikely with the current situation deteriorating. . The Ethereum network faces many operational challenges that put the cryptocurrency at risk of losing to rivals such as Cardano and Solana.
In recent years, Ethereum and ETHER have become synonymous. While Etheruem is the blockchain network that supports the ETHER token, people see them as both an incredible decentralized model and a cryptocurrency. Therefore, the challenges of the Ethereum network are often reflected directly in the price of ETHER. Ethereum’s connection with Bitcoin is also inevitable. Yes, the price of ETHER is also tied to the price hikes of BTC quite often. In summary, the Etheruem network and its digital token are heavily influenced by the mechanism behind it and the cryptocurrencies that surround it. However, Ethereum has struggled with its technical challenges recently. This paved the way for other potential virtual tokens like Solana and Cardano to press their accelerator. If the challenges prevail and Ethereum fails to meet them in 2022, then its competitors will take over ETHER’s position very soon.
The technical problem in the Ethereum network
Without evaluating its capabilities, many investors are showing up to invest in Ether tokens and institutional investors are also invading the space. In addition, the Ethereum network also hosts other relatively complex and difficult applications. While its functionality is quite amazing, that leaves us with the question, “Can the Etheruem network really handle all of this?” Using open source code with algorithms driven by supply and demand, the site runs many applications.
While Ethereum’s DeFi app is often seen as a first choice, practical numbers suggest otherwise. According to research from Dune Analytics, 2-5% of transactions on Ethereum-based decentralized exchanges have failed due to complications such as slips or insufficient gas prices. In addition, the Ethereum network is also facing problems due to its inability to scale to meet demands. Although its recent upgrade, Ethereum 2.0, is released to address these underlying technical issues, it can take years for the platform to completely streamline revisions.
Unexpected bug attack and division of Ethereum
In August, Etheruem encountered unexpected problems when the network was split into two separate chains after falling victim to a software bug. Since the platform serves as a major source for developing applications like Dapps, NFTs, smart contracts, etc., it has rocked users for quite some time. Ethereum initially panicked because it could have been a “double-spending attack” that could endanger all of its users’ data and billions of dollars. Fortunately, the attack left most of its functionality unscathed. The incident brought to light that while Ethereum is powered by amazing technology, it is relatively new and needs time to mature.
Is Ethereum 2.0 Really Effective?
Currently, Etheruem operates on a Proof of Work (PoW) system, capable of performing 15 transactions in one second. This is double what the Bitcoin network can do. As the number of transactions increases and fees decrease after upgrading from Etheruem 2.0, the platform has more responsibility than ever to make sure the job runs smoothly. Also, building Dapps, NFTs, and smart contracts in Ethereum 2.0 is complicated because it requires more technical skills. Many users may not be sufficiently educated to get the most out of the platform.
How will this pave the way for Solana and Cardano?
As mentioned earlier, the Ethereum platform and its features have a direct impact on the price of ETHER. Therefore, if the network fails to resolve user issues, this will ultimately reflect on ETHER’s presence and position in the market.
Solana and Cardano are two incredible âEtheruem Killersâ who are about to take their place anytime. Solana jumped over 17,500% in 2021 alone, outperforming many other cryptocurrencies. This gives Ethereum strong competition for smart contract capabilities. Solana is faster and more efficient than its counterpart.
Many believe that Cardano is Ethereum’s direct competitor as the long-term project is being developed by the co-founder of Ethereum at its head. Cardani is one of the few L1 blockchains that refuses to compromise their attributes in favor of scalability. Plus, his big vision for the future keeps him at the forefront of adoption.
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