Ethereum Faces Criticism Amid Price Struggles as Advocates Push Forward

Criticism of Ethereum has intensified, with some claiming the cryptocurrency is failing, especially when compared to Bitcoin’s success. The price of Ethereum has dropped significantly from its peak, prompting skepticism about its viability. Despite challenges, advocates assert Ethereum’s potential, focusing on technological upgrades and the support from big institutions as catalysts for future growth.

In recent weeks, the discourse surrounding Ethereum has intensified, leading to polarizing views about its future. Since its inception in 2013, Ethereum has experienced several significant events, from a notorious hack in 2016 to groundbreaking upgrades in 2022. Yet, 2023 has seen an unusual level of scrutiny aimed at the blockchain, as enthusiasts and critics collide over its potential trajectory.

At the heart of this debate is Ethereum’s dramatically fluctuating market price. Ethereum is noticeably trailing behind Bitcoin, which has ascended to new heights, attracting a wave of interest from Wall Street. Current trading figures reveal that Ethereum is hovering around $2,500, nearly 50% less than its peak, according to crypto exchange Binance. This gap has led some, like prominent Bitcoin advocate Max Keiser, to proclaim Ethereum’s demise, claiming it is just a matter of time before it’s “buried.”

Critics of Ethereum’s performance highlight the blockchain’s struggles as evidence of its impending failure. But others, including Joseph Lubin, co-founder of Ethereum and CEO of Consensys, argue this is an over dramatization. He stated to Fortune, “When there are challenges, we learn from them.” This learning curve has been ongoing since the beginning, when Vitalik Buterin envisioned Ethereum in 2013, aiming to combat corporate dominance in tech by creating a decentralized computing platform.

As Ethereum grew in popularity, so did its issues—primarily high “gas fees” tied to transactions. Every time users send cryptocurrencies onEthereum, they must pay these fees, similar to how Amazon charges for cloud services. However, in an effort to curtail costs, developers turned towards layer-2 blockchains (L2s), like Arbitrum and Polygon, which compress user data and post it on Ethereum, easing pressure on the primary network.

It seems this layer-2 strategy has borne fruit, with transaction costs dropping over 99% since their peak in mid-2020. Yet, Kyle Samani of Multicoin Capital highlights a potential downside: insufficient user activity on the core Ethereum network could devalue it in the long run. He suggests users are increasingly gravitating to L2s instead, which may threaten Ethereum’s currency value.

On the other side of the conversation, Paul Brody from the Enterprise Ethereum Alliance disregards views solely fixated on the price of Ether. He emphasized that Ethereum’s unique capability as a global computer should be the focal point, commenting, “I don’t think Ethereum should try to be the best, most deflationary cryptocurrency.”

Looking ahead, Ethereum’s roadmap includes upgrades aimed at increasing Ether’s value naturally rather than through market manipulation. Developers, including Danny Ryan and Vivek Raman from Ethrealize, are currently prioritising enhancements to the primary layer-1 network, and they maintain that the moment Wall Street and major tech companies fully immerse themselves in blockchain tech, demand for Ether will surge.

Raman’s analogy of Ethereum as “digital oil” encapsulates this argument perfectly. He pointed out that in discussions with institutions, Ethereum stands out as a reliable infrastructure for significant worldwide projects. However, whether Ethereum can outshine competitors like Solana remains to be seen. Brody remains optimistic, stating that if the community succeeds in becoming the go-to platform for business, then Ether’s price will follow suit naturally without any extra initiatives.