Ethereum’s Growing Pains | Fortune

by Arthur · May 15, 2023

[gpt3]rewrite

Vitalik Buterin, co-founder of Ethereum, speaks during the Singapore FinTech Festival in Singapore, Thursday, November 3, 2022. Lionel Ng—Bloomberg via Getty Images

There was drama in the world of Ethereum last week after the blockchain briefly stopped completing transactions, raising fears that some information sent to the chain would be garbled or reversed. This apparent failure only lasted about 25 minutes on Thursday, and then for a shorter time on Friday, so only a handful of blocks – the units that make up a blockchain – were at risk.

News reports cited influential Twitter accounts as saying that the problem has now been largely resolved, and that it appears to have been rooted not in the underlying Ethereum protocol, but rather in software clients used by validators – the devices that, under the new proof- at-stake system, verifies that a block and its batch of transactions are final and legitimate.

Some described the episode as a “fire drill” and noted that Ethereum more or less continued to chug along throughout, thanks to validators’ reliance on a diverse set of software clients – including some unaffected by the bug. Ethereum folks hailed this as proof that the blockchain’s decentralization makes it resilient.

I admit the technicalities here are above my pay grade, but the fact that Ethereum only took a minor and temporary price hit suggests that the blockchain is actually good. Meanwhile, most users remained oblivious to the shutdown drama, and in any case, all kinds of software applications – including well-known ones used to keep the web running – encounter it from time to time.

Still, last week’s block delays were a good reminder that Ethereum is still a work in progress, especially after the big upgrade last November that implemented proof-of-stake. Meanwhile, if you want another, more glaring reminder of Ethereum’s growing pains, ask a random user to do something with the blockchain in the first place.

I was reminded of this last week when I asked the Fortune Crypto team, as part of our effort to test drive the stuff we write about, to stake a small amount—$20 or so—of Ethereum on a consumer-facing staking service. The team quickly discovered that this was impractical since the gas fees would far exceed the amount of interest we would get from efforts.

This is a problem. While some Ethereum diehards will blow this off and say that Layer 2s or some other new technology is about to fix this, the reality is that blockchains – or any other product – can only offer an atrocious user experience for so long. This is especially the case when the banks that are crypto’s biggest legacy competitors allow you to perform all kinds of transactions for little or no fee. That’s why Ethereum needs to sort out its growing pains sooner rather than later.

Jeff John Roberts
[email protected]
@jeffjohnroberts

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