In a recent announcement, Ethereum (ETH) founder Vitalik Buterin highlighted the importance of three major technical transitions for the survival and growth of the Ethereum network.
Vitalik Buterin Announces Three Transitions Required for Ethereum's Survival
First move towards Layer 2 (L2) scaling, especially rollups adoption. Buterin argues that widespread adoption of rollups is crucial to addressing the problem of high transaction costs in the ETH network.
Currently, each transaction costs $3.75, which could rise to $82.48 in case of another bull run. High transaction costs hinder mass adoption of Ethereum-based products and often lead to the adoption of centralized workarounds.
The second transition focuses on wallet security, and Buterin advocates a shift towards smart contract wallets. It highlights the importance of users feeling comfortable storing their funds and non-financial assets on the Ethereum network. According to Buterin, the adoption of smart contract wallets will improve security and eliminate the need for users to rely heavily on centralized exchanges.
The third transition centers around privacy and the development of privacy-preserving solutions for fund transfers on Ethereum. Buterin believes that the current public nature of all transactions and other related activities poses a significant privacy concern for users. To address this, Ethereum needs to ensure that privacy-protecting fund transfers are available and other developments such as social healing, identity and reputation systems protect user privacy.
According to Buterin, failure to provide adequate privacy solutions may cause users to switch to centralized solutions that offer better data protection.
While these transitions are crucial to the future of ETH, they present significant challenges due to the coordination required for their effective implementation. Buterin emphasizes that what needs to be improved is not only the protocol features, but also the way users interact with Ethereum, which may require fundamental changes in applications and wallets.
According to Buterin, a significant impact of these transitions will be the reshaping of the relationship between users and addresses in the ETH network. In the world of Tier 2 scaling, users will have accounts at various Tier 2, and the concept of a single address per user will no longer apply.
*Not investment advice.
