Ethereum (ETH) may be losing its ground as the savvy successor to Bitcoin (BTC) as developers switch over to other projects, including Stellar (XLM), EOS (EOS), and Tron (TRX), according to a report published by Bloomberg on March 28.
The Ethereum network is nearly 4 years old. Astoundingly innovative when it first debuted in 2015, Ethereum was the first blockchain protocol enabling programmers to build sophisticated smart contracts, conduct initial coin offerings (ICOs), and use a suite of tools to develop decentralized applications (dapps).
However, per the Bloomberg report, various experts say the network running Ether is losing market share as promising projects touting better features are being delivered on competing platforms. As well, new crypto startups have begun launching ICOs on other networks, taking even more market share from Ethereum.
As put by Kyle Samani, co-founder of hedge fund Multicoin Capital Management in Austin, Texas:
“The simple reality is that until the last six-to-nine months, there were no other options besides Ethereum. Now there are.”
Is Ethereum Falling Behind?
Per the Bloomberg report and according to dapp development statistics, Ethereum’s network has already begun to fall behind. In January, Ethereum’s network accounted for only 28% of dapps while the EOS network accounted for 48% and Tron’s network accounted for 24%.
Travis Kling, founder of the Los Angeles-based crypto hedge fund Ikigai believes this lack of development could be detrimental to the Ethereum network, stating:
“Owning Ethereum today is a call option on what you think the network is going to be in the future. To the extent that Ethereum competitor projects get traction with developers, with users, with dapps built on top of the platform, that will be viewed by the market as being detrimental to the overall value of Ethereum, and that can have a negative price impact on Ether.”
Moreover, another of Ethereum’s features that’s beginning to fall behind is its average transaction confirmation time (block speed), which is around 13 seconds while some other networks boast speeds of under 1 second. While building on Ethereum brings with it some of the time lag expected with 4-year-old technology, high-speed applications built on competing platforms can feel like they’re happening in real-time.
Ethereum Is Not Done Yet
Despite falling slightly behind in some areas such as dapp development and transaction speeds, it’s important to remember that the Ethereum protocol is still under development.
Ethereum will be far better when the network transitions from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus algorithm and tackles scalability issues as well as economic finality and security when the final Ethereum 2.0 upgrade is complete.
Adding to this, Bloomberg notes that Hudson Jameson, a member of the Ethereum Foundation, said Ethereum’s network still has a strong foundation with the most amount of dedicated developers, and continues to offer the majority of initial coin offerings:
“The thing that really shines about Ethereum is its vibrant community. Everyone keeps building and supporting the cause regardless of the markets. All of the recent progress on Plasma and Serenity (Eth2) really speak to that.”
The Ethereum Foundation is fully aware of the situation they are in. Even Ethereum co-founder Ethereum Vitalik Buterin admitted that Ethereum is lagging behind to some extent in a recent Unchained podcast, where he said:
“[Ethereum has] definitely lost some lead to some extent, and I think that’s just because, first, it’s kind of inevitable and unavoidable because Ethereum really was the first general purpose, smart contract. That’s part of an inevitable part of the process.”
Which project do you think could possibly overtake Ethereum? Let us know in the comment section below.