Cryptocurrency enters its "adolescent stage": What is the future development of Ethereum?

Cryptocurrency has entered its "adolescent" stage, but progress in usability remains relatively slow, largely due to previously high transaction fees and clunky user interfaces.

Written by: Ebunker

Cryptocurrency Enters Its "Adolescent Stage"

Recently, Ethereum co-founder Vitalik Buterin delivered a speech at the TOKEN2049 conference, discussing topics such as the usability of cryptocurrency, its use as a means of payment, and the security of the entire ecosystem. He believes that cryptocurrency is no longer in its initial development phase, but its usability is still in the early stages, with practical usability gradually improving. Cryptocurrency has entered its "adolescent" stage, but progress in usability remains relatively slow, largely due to previously high transaction fees and clunky user interfaces.

The Success of Ethereum L2 and Its Low Fees

Vitalik stated that during previous periods of network congestion, Ethereum gas fees once soared above $200. In the past, in order to protect the privacy of his transactions, he was forced to pay over $800 in fees for a single transaction, but now this situation no longer exists, thanks to the development of Ethereum L2. L2 moves some transactions from the mainnet to layer 2 blockchains, which is crucial for reducing Ethereum mainnet costs and improving its scalability.

Recently, there have been voices in the industry questioning whether the development of Ethereum L2 has weakened Ethereum L1. However, according to Vitalik, the low transaction fees of L2 are an important milestone for the entire Ethereum ecosystem because they address a major challenge to mainstream adoption. Currently, L2s such as Optimism and Arbitrum have thriving ecosystems precisely because they have successfully reduced fees to below $0.1. Moreover, rollups have also achieved this milestone, making transactions more secure and affordable for users.

Meeting Mainstream Demand While Maintaining Decentralization

In addition to transaction costs, Vitalik also discussed Ethereum's success in transaction "time." After the Ethereum merge and the transition to PoS (Proof of Stake), the average waiting time for the next block was successfully halved, reducing transaction wait times to 5 to 15 seconds, while transaction times on Ethereum L2 networks have dropped to about 1 second.

Vitalik also mentioned another common challenge in the cryptocurrency industry: meeting demand while maintaining decentralization.

Notably, Vitalik recently posted on X, expressing hope that Ethereum L2s will become more decentralized. He believes that in practice, L2s should inherit the security of the L1 they are based on. The current problem is that although Ethereum L1 is decentralized, L2s built on Ethereum are not necessarily decentralized. In fact, it is very difficult for L2s to achieve the same level of decentralization as L1. For example, Coinbase's Base chain also presents itself as an Ethereum L2.

Vitalik stated that starting in 2025, he will only publicly recognize L2s that have reached Stage 1 or higher in decentralization efforts. At this stage, an L2 network requires 75% consensus from the council to overturn the proof system, and at least 26% of council members must be independent of the rollup team. He believes "this requirement is reasonable and necessary for the security of the network. Moreover, other L2s focused on zero-knowledge technology are also approaching Stage 1."

Ethereum's "User Experience Revolution" and Development Direction

Vitalik also emphasized advances in account abstraction technology and the "user experience revolution." Currently, mainstream society still has reasons not to use crypto assets, such as "cryptocurrency inefficiency," but this is not due to technological limitations. Blockchain is already empowering the internet, acting as "digital concrete" (blockchain can create a kind of digital hardness, building robust and tamper-resistant digital structures, just as concrete is used to create solid physical structures).

In fact, users can now create a simple real account (smart contract wallet), and only when the user generates proof that they control a specific email address can they send transactions from it. Therefore, it is now basically possible to introduce Web2's social recovery features into the Web3 world.

Vitalik also mentioned the need to improve wallet security, especially to protect them from centralized actors. He commented on the inherent flaws of both extreme self-sovereign wallets (mnemonic cold wallets) and traditional options relying on trusted third parties (CEX).

In contrast, he believes that multi-signature smart wallets are a more balanced solution. By requiring multiple private keys to authorize transactions, multi-signature wallets can provide enhanced protection for user funds while still maintaining a high degree of privacy. (Note: Multi-signature security means users have multiple keys, for example, 6 keys, and 4 are needed to send a transaction. Custom rules can even be set, such as only requiring 1 key for small transactions.)

In addition, Vitalik discussed ongoing technical improvements on the Ethereum mainnet, such as enhanced decentralization, reduced confirmation times, and improved scalability. These advancements will play a key role in Ethereum's future success.

According to his predictions, the future Ethereum ecosystem will develop toward social networks, payment systems, private mining pools, zero-knowledge, and human proof technologies, while maintaining both decentralization and practicality.

Let us wait and see as this "adolescent" protocol gradually matures.