If the Ethereum blockchain “The Merge” succeeds, it could overshadow the Bitcoin blockchain as its scope is broad, ecosystem observers say.
Ethereum, the “blockchain” changing operation this week, is a pillar of the entire economy built around “block chains,” computer protocols that could usher in a new age of the internet.
Ether, the cryptocurrency directly linked to Ethereum, represents only about 20% of the total value of existing virtual currencies, second only to bitcoin (40%). But Ethereum has a much broader scope and serves as a medium for multiple applications.
A much wider field of application
“It is around Ethereum that most of the developments in the cryptocurrency ecosystem are concentrated,” said Simon Polrot, “blockchain” expert and former president of the Association for the Development of Digital Assets (Adan).
Unlike the Bitcoin “blockchain”, which is primarily designed to exchange units of value – the famous bitcoins – Ethereum was designed from the start to support lines of code.
So it makes it possible to build a kind of global virtual machine, based on all the computers participating in its network – about 9,000 machines or “nodes” on the planet today.
“Ethereum is a bit like Windows or macOS. It’s the operating system on which you can build your applications,” summarizes Manuel Valente of Coinhouse, a French company that aspires to become “the future European crypto bank”.
“Anyone can plan a new asset on Ethereum,” adds Simon Polrot.
For example, Ethereum’s relative ease of use has made it the “blockchain” star for storing NFTs, these digital certificates of authenticity that may play a key role in future “metavers”.
For Simon Polrot and Manuel Valente, Ethereum now probably concentrates 90% of the value of all NFTs issued to date. For example, it is on Ethereum that the sports stickers issued by Sorare, the French company that just signed a contract with the NBA, are based.
The controversial “Bored Apes Yacht Club” monkeys, which sparked speculative frenzy and attracted sports and entertainment stars such as Neymar, Eminem and Paris Hilton, are also on Ethereum.
The same observation in the field of decentralized finance (DeFi), these applications that allow to lend or borrow cryptocurrencies.
Today, according to estimates by specialist site Defi Llama, Ethereum represents about 59% of the value captured in all current DeFi business, far ahead of rivals such as Tron or BSC, the cryptocurrency created by Chinese crypto giant Binance. .
Some rival “blockchains” have conquered a certain audience, such as Polygon, Tezos or Avalanche, the latest which is generating a lot of interest. But Ethereum is in a strong position and “if it manages to transform, it could become ultra-dominant,” explains Manuel Valente.
However, Ethereum will have to overcome a new obstacle in 2023 or 2024, the expert warns: it will indeed have to undergo another mutation in order to increase the number of transactions it can record per second. With currently 20 operations per second, this capacity remains too limited compared to the ambitions.
For that, it will be necessary to pass this week’s “Merge”, an update to Ethereum that is supposed to disrupt the validation method on the “chain of blocks”, an essential part of its operation. In this case, being able to validate operations will no longer be a matter of considerable computing power, but of placing 32 ethers as collateral (about 50,000 euros at the current price), an amount that can be confiscated in case of bad behavior of the “validator”. However, what would happen if this novelty were to fail, for example due to an undetected flaw in this protocol?
“In the short term, of course, it would be a very bad event,” says Simon Polrot. But the expert refuses to catastrophize: “In the worst case, there would only be a postponement of the operation,” he anticipates.