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Ethereum’s Vitalik Buterin: Web3 Vision ‘Fades’ Due To High Transaction Fees, Encourages Gambling
Ethereum co-founder Vitalik Buterin observes a shift in Web3’s vision, overshadowed by high transaction fees.
He notes that Web3, initially seen as a new, open internet layer, now struggles with these costs.
This shift has pushed aside broader participation, leaving mainly gamblers who can afford the fees.
Buterin highlights an ideological divide in the decentralization movement.
Traditional advocates view crypto as a distraction, while crypto users often rely on centralized means like exchange accounts.
This reliance contradicts Web3’s decentralized ethos.
Buterin also points out the dwindling conversation around using crypto for everyday transactions.
Despite these challenges, Buterin is focusing on features like Ethereum scaling solutions, privacy tools, and zero-knowledge (ZK) proofs.
Buterin also mentions Ethereum’s “social layer” as crucial for its success.
This layer upholds values like open source and censorship resistance, necessary for the technical aspects to thrive.
Buterin’s vision extends beyond technology.
He emphasizes integrating diverse user groups, like profit-driven gamblers, into the Web3 culture.
He argues for a balanced approach, combining incentives, community values, and strong principles to nurture a more inclusive and decentralized ecosystem.
This integration, he believes, is vital for Ethereum’s overall success. Read more here.
Blockchains are currently platforms of huge potential and trade-off issues.
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High US concentration of Ethereum nodes raises decentralization concerns.
Lightning strikes: Major vulnerability exposed in Bitcoin’s top scaling solution.
How Are Zucoin And Splitchain Solving Fundamental Ethereum Issues Highlighted By Vitalik Buterin?
Vitalik Buterin’s candid assessment of Ethereum’s current state underlines significant challenges, notably the escalating transaction fees and the consequent dilution of the Web3 vision.
His observations bring to light the dominance of gamblers in the blockchain space, primarily driven by prohibitive transaction costs.
This scenario has inadvertently skewed the blockchain’s user base and public perception in mainstream media.
Buterin’s critique extends to the low amount of non-financial applications on the platform, the growing rift between crypto enthusiasts and other decentralization proponents, and the over-dependence on centralized means for crypto transactions.
Despite recognizing Ethereum’s needed advancements in scaling solutions, privacy tools, and social layer development, solutions for the core issues of high transaction fees and ecosystem imbalance remain mostly unaddressed.
Rising transaction fees and the exclusion of a broader user base is a critical concern in Ethereum’s ecosystem.
Zucoin, using the innovative SplitChain architecture, fundamentally alters the transaction processing landscape.
Unlike Ethereum’s block-based structure, which often leads to congestion and elevated fees, SplitChain processes each transaction independently.
This unique approach significantly lowers transaction costs, making blockchain technology accessible to a wider audience beyond the affluent or speculative traders.
The lack of non-financial applications on blockchain platforms is a notable point.
Zucoin’s Splitchain architecture has no in-built transaction costs and their current work on decentralized scalability should help to encourage an ecosystem of diverse non-financial applications over time.
By lowering costs, more people can get involved and experiment with the Splitchain platform.
This shift is crucial in reviving the original vision of Web3 as an open, versatile internet technology stack, moving beyond the finance-centric, speculative model that currently dominates the crypto space.
Crypto systems are, after all, ways to reliably prove whether a transaction—of any kind, happened a certain way.
In the real world, this could mean easily proving a mechanic repairing your car used OEM-authorized parts, a contractor attended your house while you weren’t home, or a delivery driver dropped off a package at the correct address.
With a system flexible enough to handle all kinds of transactions, not just financial, products like these could emerge from an ecosystem of entrepreneurs and developers.
Centralized crypto transactions have been another area of concern, with a significant majority of crypto dealings still routed through centralized platforms.
Many of these solutions come under the umbrella of “layer 2 scaling”.
Shockingly, these kinds of crypto transactions rarely touch the underlying blockchain.
Some of these layer 2 platforms will create a transaction that represents many smaller, individual transactions, and slowly send it through to the underlying blockchain much, much later.
It’s how they give the impression of faster transaction speeds, but the real transaction actually isn’t settling on the blockchain at that time.
This is an issue because it means, often, that a mostly centralized “layer 2” group of companies is responsible for managing your transaction until it actually settles on the blockchain.
In some layer 2 platforms, if your transaction is bundled along with many other transactions and you want to leave that layer 2 platform, you may need to do another transaction to separate your tokens out of that group.
As you can probably tell by now, the entire process gets very complex and messy, quickly.
Hence many layer 2 platforms are operated via what’s known as a “trusted setup”.
Meaning, a centralized group of companies that help manage the safety and speed of such systems.
For example, most crypto exchanges settle transactions using their own centralized databases, due to the high fees and slow settlement times of traditional blockchains.
In a way, this is another kind of layer 2 system—an attempt to work around the underlying limitations of traditional blockchain systems, with the side-effect of heavily centralizing usage amongst exchanges.
As Ethereum’s Buterin pointed out, it goes against the vision of blockchain and Web3.
Splitchain on the other hand, settles a transaction in 90 seconds, directly on-chain.
And it’s designed to be permissionless, so anybody can join the network and participate.
Technically, you could introduce a layer 2 solution to speed up Splitchain’s transaction settlement time even further with a similar kind of platform addition, but for most use cases it isn’t necessary.
Splitchain, with its ground-up rethink to transaction processing, is working to offer the crypto industry a practical and innovative solution to the hard challenges pinpointed by Buterin in Ethereum’s trajectory.
Zucoin’s aim is to represent a new era in the crypto industry, focusing on the vision of a far more useful Web3 ecosystem.
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All the best,
—Rob
MyZucoins
Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.