In this post we will be discussing some of the flaws and limitations of the Ethereum network. But, before we get started, I’d like to make one thing clear: this post is not designed to incite any hostility toward Ethereum, and I really love Ethereum for what it has done for the crypto ecosystem.
Even if I hope to cover a large number of Ethereum-related issues, I will not be able to compile an exhaustive list of the issues that can be attributed to the cryptocurrency. I only hope that I can bring some attention to some of the concerns that are sometimes disregarded in the cryptocurrency market’s second largest capitalisation.
1. The nature of smart contracts on Ethereum
Ethereum is a type of decentralised world computer that operates on the Ethereum blockchain. Its creator, who did not want to set any restrictions on what may be deployed on the network, had this goal in mind when he created the network. When it comes to developing Ethereum smart-contracts, Solidity, the programming language used to do so, is ” Turing-complete,” which means that it is capable of performing recursive functions and other complicated mathematical computations.
As a result, developers are unable to correct defects or errors in an existing contract, which can result in hackers being pleased. Smart contracts must, as a result, be thoroughly investigated and audited before they can be implemented. Who would want their ICO contract to be compromised? This has the potential to bring initiatives to a close, such as MakerDAO and its stablecoin Dai.
A security researcher recently received a $50,000 reward from the platform for uncovering a problem that might have allowed over $7 million in assets to be taken.
2. The Ethereum Virtual Machine Problem
In the world of computers, there are various different approaches to set up a system. Each technical decision must be taken in the context of a variety of factors. The history of computer systems has taught us that the most effective computer systems are those that are built of specialised modules.
We can assemble these small, particular, simple, and efficient systems once all of the services they provide have been identified. Most of the functions of the Ethereum virtual machine, are carried out in a fairly opaque manner, and the virtual machine does not appear to be adequately efficient while performing calculations.
Some believe that the “global computer” feature of Ethereum is the most significant flaw in the system. It is verification, not computational power, that is the primary value proposition of blockchain technology. It is not necessary to duplicate interactions between multiple smart-contracts on separate machines in order to avoid duplication. This is the protocol that is utilised by numerous overlay projects because only transaction validation needs to be done through the protocol.
3. The unlimited supply of ethers
When analysing a cryptocurrency project, or a protocol such as Ethereum, the quantity of tokens in circulation is one of the most important indications to consider. It is vital to investigate how many tokens are currently in circulation, how they are placed into circulation, and who owns them.
When it comes to some projects, like as Ripple, people shudder because the firm of the same name owns a majority stake in them, but Ethereum is confused on a number of other issues. The most contentious issue is the maximum number of ethers that can exist at one time. Etherum is being awarded to miners at the moment as compensation for their efforts.
This is a standard procedure for cryptocurrencies that make use of a proof-of-work mechanism to verify transactions. On the other hand, if the number of bitcoins created by this system is finite (21 million units), this is not the case for Ethereum and ethers.
Because of the anticipated transition from proof-of-work to proof-of-stake of the protocol, which has not yet been implemented, this is the case. This demonstrates the instability of ether management, and the question therefore arises: is ether a token that is rare or at least becoming scarce?
4. An inefficient choice of consensus
Making the decision to use a decentralised system is a personal one. Although decentralisation has a cost, it is not always measured in terms of the price of the solution; yet, we will frequently find a more efficient centralised option in the end. As stated in the Bitcoin white paper, the Bitcoin network is not a highly efficient network.
The few paragraphs that follow indicate that Bitcoin does not intend to be extremely efficient, but rather to operate without the oversight of a central authority. The majority of Bitcoin’s strength can be attributed to what could be called flaws in the system. Transactions are being placed on the network slowly, making it all the more difficult to launch an attack against it.
The broadcasting system between each node is out of date and redundant (each node will transmit the information to all of its neighbours, even if they already know it), which means that a greater number of nodes can fail, and n must rely on the confidence of the other nodes to function properly. It is, however, the handling of the created data that allows Bitcoin to function so efficiently.
We always know what data is coming in, how many of them there are, and when they will arrive, because it is a set number. As blockchain size grows, it does so in a linear fashion, making it far more manageable for nodes, which is not the case in the case of Ethereum.
5. Organizing and utilizing data
The amount and size of data that must be managed by the Ethereum network changes, which means that the network might become saturated with this data and become vulnerable as a result of this. This saturation not only results in a queue for transactions, with a priority ticket reserved for those who pay the greatest fees, but it also causes a spike in transaction prices.
It is also a security concern, because if these network congestions can be put up in a malevolent manner, it can lead to the exploitation of security weaknesses and vulnerabilities.
6. Unsatisfactory user experience
In my perspective, one of the biggest obstacles to mainstream adoption of cryptocurrencies is inexperience. Despite the protections put in place, using ecological protocols remains problematic. But Ethereum, and the mechanisms that surround it, are among the worst. But address management is still Bitcoin. But Ethereum isn’t just about ethers. The latter are exclusively used to fund network transactions.
When using decentralized applications, tokens will be traded. But ethers are still needed to issue and maintain numerous tokens, making the process less readable. The storing of these tokens is also a stumbling block for users. You must transmit them to an Ethereum address using a software or electronic wallet. In most circumstances, you will have to manually add your tokens to see the balance.
Moreover, the Ethereum ecosystem’s UI/UX problem extends beyond token storage. Most decentralized programs lack user-friendly interfaces, making them difficult to comprehend. Comparing a standard exchange’s UI/UX to a decentralized exchange is easy.