What you should know about these long-term Ethereum risks
Bitcoin and Ethereum are the two of the largest cryptocurrencies in the world. While Bitcoin and Ethereum have both secured a major share of the cryptocurrency market’s value, their purposes are widely different. What this competition between the two has also done is fueled conversations about which crypto is better than the other.
So, is ETH much superior when compared to Bitcoin? Maybe not. Comparisons aside, it’s worth noting that none of the two are immune to any long-term roadblocks or risks. The same was the topic of discussion on the latest edition of the ‘What Bitcoin Did’ podcast.
According to Kohen, with Ethereum, if one downloads some kind of Ethereum wallet, a so-called Light client in the Bitcoin world, one is trusting someone else to give you the correct view of ETH blockchain.
“You’re not actually doing the validation yourself. If you do it yourself, it is quite tricky compared to Bitcoin to get the entire ETH blockchain downloaded and validating all those rules.”
Moreover, ETH faces two major risks in the longer term, with the biggest problem being its bloated blockchain. For contextual purposes, consider this – For Bitcoin, 400ish gigabits of the Bitcoin blockchain, that’s like a decade’s worth of blockchain.
Kohen, however, argued that when it comes to Ethereum, “we are talking about much less time, but a massive amount of data. Right now, while ETH is being used a lot, and a faster rate of growth is possible to some extent, that’s “certainly, it’s going to be an issue,” the crypto-software engineer added.
“You can’t expect there to be a large distributed network of fully validating nodes. These issues come when dealing with centralization; Quite the opposite of what the overall crypto community is trying to solve.”
Stressing on the importance of decentralization, the developer also touched upon the second problem – Censorship.
According to Kohen, unlike Bitcoin (i.e. censorship-resistant), some of the stablecoins on Ethereum have terms and conditions that mention the concept of blacklisting some of the addresses. The engineer further added to this narrative by revealing a ‘dirty secret’ of most of the smart contracts there in the space,
“Plenty of smart contracts out there have upgrade mechanisms where a certain number of people sign off, essentially a version of an ‘admin keys’ for the smart contracts. Basically a mechanism by which a small number of people can decide that some addresses aren’t allowed to use this contract which would censor that activity. Ethereum as a whole, individual projects and contracts can be centralised entities.”
If that is the case, how would one characterize Ethereum though? That’s a difficult question to answer. The engineer, however, was quick to conclude that,
“Ethereum is not exactly private, maybe pseudo-private with a small federation that controls it.”