Ethereum (ETH) must achieve three key goals in its development work to ensure future-proofing, according to founder Vital Buterin: Scalability, privacy, and wallet security.
Ethereum (ETH) took a huge development step in the fall of 2022 with “The Merge,” which observers believe put it about halfway to becoming a future-proof Ethereum 2.0. Now founder Vitalik Buterin has spoken out in a blog post and outlined which three tasks in the development work are most urgent in his view. Because only in this way can Ethereum succeed in transitioning into a mature solution “which offers normal users an open, global and free (“permissionless”) experience.”
In terms of the general objective, Buterin thus once again stands behind the vision of delivering an ecosystem and cryptocurrency with Ethereum that represents an alternative to the traditional financial sector. Here, as always, Buterin ties in with the basic idea of Bitcoin (BTC), which he has already expanded with possibilities such as smart contacts, NFTs and DApps. But the success of Ethereum, the undisputed number two global cryptocurrency behind Bitcoin, has already provided Buterin with the development goals he now lists, almost by themselves, on paper:
1. scaling: even after “The Merge,” Ethereum’s blockchain can only handle just under 30 transactions per second (TPS), but the demand is many times higher. This has led to great success for so-called Layer 2 solutions, which bypass the eye of the needle on Ethereum by processing transactions on their network first and then documenting them in bundled form on ETH’s blockchain. Without deeper entrenchment of Layer 2 solutions, Buterin said, Ethereum will fail because transaction costs are too high. Already, the transaction fee is $3.75 on normal days, he said, and in times of heated markets, it will rise again to $82 or more. That’s why scalability needs to be increased on Ethereum, he said, and Layer 2 solutions are the most promising way forward at the moment, in Buterin’s view. He most recently made it clear where his preferences lie on this issue by helping to launch a zkEVM (zero knowlegde Ethereum Virtual Machine) at Polygon (MATIC).
2. security of wallets: Buterin does not think much of storing balances in ETH at centralized instances such as crypto exchanges. In order to keep Ethereum decentralized, he says, ordinary users should be able to use wallets without worrying about security. We also keep pointing out that so far hardware wallets guarantee the best balance between security and usability, and trusting crypto exchanges can be deceptive. Under the keyword “smart contract wallets”, Buterin now wants to make solutions the standard at Ethereum that deliver more functionality than previous wallets and at the same time are easy to restore in an emergency.
3. privacy: Buterin fears that Ethereum could lose approval if privacy is not guaranteed when using ETH. Currently, ETH offers essentially no privacy in transactions, and the use of so-called mixers as a way out has already been approached by regulators and law enforcement. Buterin wants to make privacy the norm on Ethereum by introducing a “stealth address system”, among other things, and has already published a detailed blog post on this in early 2020.
Conclusion: Vitalik Buterin remains the thought leader at Ethereum
Buterin makes no reference in his latest blogpost to recent developments in the U.S., where the SEC regulator has begun declaring war on the crypto industry. But the timing of his comments on Ethereum’s future security could hardly be better – as Buterin is making an abundantly clear reminder that ETH must remain censorship-resistant in order to grow. His claims may not be well received by all institutional Ethereum major investors, but the original community behind ETH is likely to understand the wake-up call. Now it is up to the developers at Ethereum to sort out and implement the bundle of measures. Meanwhile, Buterin’s development goals, which are also outlined in initial technological details, underscore his position as a thought leader at ETH and his willingness to actively collaborate.