Will the Ethereum blockchain be the component of the web of tomorrow?

Many developers are turning to the Ethereum blockchain to design new applications. It could also be one of the components of what is called web 3.0 or semantic web, where a number of decentralized services could one day challenge GAFAM’s offerings.

Ethereum: A blockchain widely used by developers

According to Sandeep Nailwal, co-founder of Polygon, “60-70% of the sector runs on Ethereum. It is a very sensitive subject “.. As a result, the price of the Ethereum currency, known as Ether (ETH), has risen 9 times this year. All usable and circulating tokens are worth $ 350 billion as of October 1, 2021. By comparison, this equates to 40% of the value of all bitcoins worth over $ 800 billion.

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Since 2015, the number of tokens for Ethereum has been steadily increasing, and this is relatively stable. However, at the beginning of this year, with the increase in the price of the token, Ethereum has entered a new phase: the number of tokens in circulation will increase much more slowly than in the past, or even decrease. We therefore evoke the possibility that tokens will become more expensive than bitcoin since they will be a little more “scarce” on the market.

Graph representing the fluctuation of the number of tokens (in millions) over time.

Graph representing the fluctuation of the number of tokens (in millions) over time. Source: Financial Times.

Last September, the supply of tokens had already been reduced. Some of the tokens that were previously valid are now considered unusable. A second phase of reduction could begin later this year or early next.

One of the reasons Ether has seen its price increase is the use of a very specific token called NFT (non-fungible token or non-fungible token). Only one token is created at a time and cannot be exchanged. NFT is linked to a physical object or digital artwork (image, photograph, video, audio file, etc.) which is then sold as a digital good. Along with NFTs, we also note the emergence of the DeFi market (for decentralized finance). By allowing for the creation of a large portfolio of financial services, it offers the ability for cryptocurrency holders to borrow based on their assets or lend them. These two new markets are contributing greatly to the rise of the blockchain.

A series of changes to improve Ethereum’s capabilities

At the same time, Ethereum has embarked on a number of changes in its network. One of the lines of work would consist in “sharing” the network by dividing it into 64 more “restricted” ones, but all connected by registers that would reduce the voltage on each node of the network. This would particularly prevent the network from validating each transaction one by one.

Another change aims to reduce the energy consumption of its currency by reducing what is needed for validators. It is moving from Proof-of-Work to Proof-of-Stake. While the former uses the same energy as a medium-sized country, the latter consumes as much as a small town of 2,000 homes.

Also mentions Vitalik Buterin “the ability to make other changes to the underlying protocol to reduce the load on the nodes”. It also clarifies his optimism: “in two years, some of these initiatives will be in place and Ethereum will see its capabilities significantly increased”.

A creator’s desire to adapt to user needs

Unlike Bitcoin, Ethereum does not rely entirely on a clear monetary vision or with a cap on tokens that can be initially created. Vitalik Buterin, the creator of Ethereum specifies “That will adapt to all user needs”. This announcement opens up the possibility of further changes to the way tokens are created and thus to the long-term supply of Ether.

According to specialists, one hope behind this price hike is that Ethereum will be a core element of web 3.0. “Its use by a large number of developers who already create applications makes it an important tool for developers of cryptocurrencies such as JavaScript among web developers.” according to Sandeep Nailwal.

To attract more developers, most new blockchains allow them to run their own applications in “Ethereum virtual machines”. They allow the creation of bridges to the Ethereum blockchain. Some big names are also adapting their offering, such as Amazon Web Services which has adapted its Amazon Managed Blockchain service to Ethereum.

The use of the blockchain could be the best weapon to thwart attacks on our personal data. The drop in the number of tokens, the arrival of NFT and DeFi, the changes related to user needs and energy consumption are all reasons that lead us to believe that the Ethereum blockchain will be at the center of tomorrow’s web. , web 3.0.

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