Understanding the current criticism of Ethereum

The last couple of months have seen an enormous rise in heavy criticism of Ethereum, the platform itself, the value of ETH in its usage, and the future of Ethereum.

I think it is important to understand where this criticism comes from, and understand what could change in the future to improve the situation. Most criticism aimed at Ethereum at this moment in time is perfectly valid, but it doesn't take into account any of the many technological advancements being worked on.

Criticism 1: Smart contracts are unsafe This is still being talked about quite a bit. Smart contracts represent an inherent amount of risk, due to their immutable nature. And here comes the important part: there is currently no formal verification possible of smart contracts. When we talk about potential applications that would handle millions of $$, this is obviously an issue. How can this be changed? Simply, by implementing formally verifiable EVM compatible languages. One of these initiatives that is already quite advanced is AxLang (https://medium.com/axoni/axlang-formally-verifiable-smart-contracts-for-the-ethereum-ecosystem-6201203be4e8), a Scala implementation that could be used to formally verify smart contracts. Potential game changer.

Criticism 2: Scaling Obvious issue here. It's not worth going into detail, as everybody is very much aware of the scaling issues encountered by Ethereum (and all other platforms). Multiple solutions are being worked on, from layer 2 side chains (Loom Network style), to Plasma chains, down to (the most difficult ones) base layer scaling solutions like sharding. It's important to understand that these are technically extremely difficult problems. Furthermore, implementing them on an existing platform is even more difficult. That being said, the brightest minds are working on these solutions, and it seems clear that if any platform were to reach real scalability while keeping security and decentralization (ahem, ahem, not EOS), it will be Ethereum. Again, it's important to understand that most criticism of Ethereum as a world-decentralized computer originates from the idea that Ethereum will not be able to reach mass scalability. And if this is the case, Ethereum's value proposition indeed becomes way less interesting, if not non-existing. Scalability is not a simple feature, it's crucial to Ethereum's feature.

Criticism 3: there are no active dApps // no one uses Ethereum as its intended to be used Once again, very valid criticism. If you look at a list of active dApps, the monthly active users are extremely low. Now, here is an important point: if you look back at points 1 and 2 above, something becomes obvious: Ethereum is not yet ready for actual real-world mass adoption. This has been proven by CryptoKitty. What this means is that nobody competent is currently going to invest massive amounts of money and time into developing potential mass-adoption dApps (I'm mainly thinking video games here) when there are still inherent security problems, and more than that, scalability issues. Would you waste millions of $$ and years into developing a Pokemon Go-like game on Ethereum if you knew that it currently supports 14 tx/s? This economically doesn't make any sense. Most interesting applications on Ethereum will come by the time scalability and security are not an issue any more.

Conclusion I could go on for a while, but I just wanted to point out the fact that if you believe in Ethereum's value proposition, in the developers working on Ethereum, the actual growth we are expecting will probably happen in a year or two. As long as Ethereum as a network isn't able to support this growth, it automatically blocks innovation too. A lot of things are being developed (Augur, Golem), but simply to use, everyday dApps (like games) will be waiting for the network to improve. Other criticism of Ethereum such as value of ETH in the platform have been addressed by multiple people (for instance by Vitalik, and he explains it well).

My bet on Ethereum is in the long run. If it manages to implement actual scalability (sharding, alongside POS), with good layer 1 and 2 scalability options (lightning-style, Plasma, side chains), all while maintaining high security and decentralization (keeping requirements to run a full node low, formally verifiable SC languages), that's when we will see the real innovation possible on Ethereum. I don't like to take the Internet analogy, as it is quite obviously wrong, but some parts are still true. And here my final message would be: in 2000, nobody could even envision the kind of innovation that would be made possible by the internet. I think we are at the same stage with blockchains. We can't be sure yet of which dApps will become main-stream, since the technology isn't mature yet.

Focus on the long term.