Etherium Fail — How the Blockchain Giant Let Down its Supporters
Recently the major concern voiced by Vitaliy Buterin, the co-founder of Ethereum, during his interview with Bloomberg was the lack of real-life applications providing real value to blockchain projects. He said,“The next step will be getting people who are already interested in cryptocurrencies to be involved in a more in-depth way. Go from just people being interested to real applications of real economic activity.” This statement was made against the background of a sharp drop in the value of Ether, which has fallen over 85% from its January peak this year. It is now being sold at under $200 after a recent selling round alongside competitive coins including Ripple and Litecoin. No reassuring comments were made for pressing limitations as tough scalability, speed, and cost of transactions, and lack of private data security. It seemed like the creator of Ethereum universe either truly believes introducing his technology to real businesses somehow addresses the involved issues or he simply failed to think his message through.
Today, OSA announces a protocols competition to select a key blockchain technological partner for our project’s backing since Etherium is clearly not able to deal with the serious and ambitious real-world applications we were seeking. Alex Isaiev, the CEO of OSA, sadly admits the core of the technological system underlying their advanced retail solution has turned out to be ineffective and unable to deal with the needs of this steadily growing global business. He bluntly confirms Etherium prevents their platform from the worldwide expansion expected by all the parties involved. “I must admit, one year ago, I was motivated by Vitaliy’s speech on blockchain urgently requiring real life applications. We relied upon Ethereum (Quorum-based on Ethereum) for our private chain solution, although we knew about system limitations at that time. Yet, we have trusted Vitaliy’s promises to increase the speed of transaction, solve the scalability issue as well as other pressing issues for businesses. Being true to our goal, we have succeeded with the timely development of our application. Demand on our services grew significantly and now we are facing a great challenge as we simply cannot scale our services, we are not able to due to the technical limitations of the Ethereum system. OSA is an existing, successful business, partnering with big brands, like Nestle, Metro, Mars, Coca-Cola, Danone, L’Oreal and many others. We believe in our mission of creating the global ecosystem for existing businesses in the world’s biggest sector of the economy. Today, we are postponing a number of business development initiatives as Ethereum failed to deliver the required features and lift systems limits strangling the real business. Now we need to rebuild the platform practically from scratch. Needless to say, this destroys our faith in Ethereum and costs us money and time. For start-up us — it is critical and irreversible damage.”
Ethereum has failed us in many ways, and despite the seemingly temporary nature of many of them, the problems seem to linger and escalate.
- The system was not initially designed to address the enterprise solution’s needs, and it has not changed. By using the public blockchain, we have to compromise sensitive business data, holding noone responsible for its security. There is practically nothing you can do if one or several nodes cause the violation of prescribed contract terms fulfillment or simply allow data security breaches.
- A problem directly related to the previous one lies in the absence of data layers differentiation: While retail business requires private and public data, both with simultaneous records and flexible access levels, Ethereum presents only rigid data frames, unadjustable for business needs.
- The transactions speed satisfied our needs up to the moment of the ecosystem boost, but with growing functionalities diversification and increasing business needs, the supported speed was not enough. Unfortunately, promised system upgrades seem to be far away.
- The cost of the transaction is another unfriendly side of the Ethereum chain as it levels any business profit provided by other blockchain related benefits.
- The last, but probably the most pressing system weakness, is the process of tokens distribution with lock up strategies. As stated by OSA’s Senior Blockchain Developer, Eugene Rupakov, three transfers in one block can take much gas and last as long as 10 minutes. Having 30.000 holders, token distribution alone would take us months.
With all that said, OSA has announced competition for long-standing technological partnerships. MOUs were signed with Intervalue, IPchain, HPB, Everitoken and Penta followed by a row of successful tests of these blockchain protocols. It seems Ethereum is not so indispensable and universal as it’s trying to appear after all. While they spend enormous efforts on PR and grand statements, other more humble companies are working on actually developing unique and effective solutions.