Why ICOs Are Giving Up On the Ethereum Network
4 Key Reasons ICOs Are Giving Up on Ethereum
Entrepreneurs worldwide tend to put significant focus on blockchain-related topics, as this is one of the most hyped and profitable digital business fields. However, a closer look will help you see what things actually look like.
Just a couple of years ago, in 2016, a great scandal with the DAO organization took place. Their set of smart contracts raised $150 million during a crowdsale, and lost $50 million in Ether because of fraud. An unknown hacker simply stole the money; the person hasn’t ever been revealed. The outcome was unexpected. Ethereum was divided into 2 branches: one of them still uses a forked blockchain, and Ethereum Classic uses the original blockchain.
If you really take your business seriously, you should try to build your business relations with reliable platforms and services only. This event, as well as other global and financial troubles, led to many serious hesitations. And while most ICOs are launched on Ethereum, more and more ICO teams are looking for Ethereum alternatives.
Using Ethereum for this purpose is like driving a car that could break down any minute, even though there are so many other cars in the garage.
The 4 Key Issues With Ethereum
The modern cryptocurrency market is full of profitable offers and powerful tools. If something is not good, crypto enthusiasts switch to alternatives immediately. The point is to raise your capital, and Ethereum is now too risky.
Let’s take a look at the four major reasons why Ethereum is becoming less popular with ICO organizers.
Low Transaction Processing Speed
TPS, or transaction processing speed, is one of Ethereum’s greatest disadvantages. Although the founders initially claimed to provide much better TPS than Bitcoin, the results are not so positive. Unfortunately, Ethereum TPS constantly slows down. We analyzed the TPS demonstrated by different service providers. Here’s what we found:
- Visa — almost 2,500 transaction per second;
- Paypal — over 200 transactions per second;
- Litecoin — around 20 transactions per second;
- Ethereum — 15 transactions per second and less.
Additionally, the increasing number of Ethereum users leads to continuous TPS slowdowns. Numerous trades suffer from this issue daily.
Ethereum is a multifunctional platform. It tries to replace ledger as we know it, behave like a supercomputer, generate smart contracts, and provide many other features. Thus, the platform is rather flexible, but it exhibits a considerable lack of scalability. Most ICO projects require optimal scalability from day one, and as we can see, Ethereum is not the one that can deal with such difficult tasks.
High Transaction Fees
As a business owner, you are always striving to raise money in this crazy cryptocurrency rush. Potential profitability and promising results look so attractive, one can hardly resist the wish to join the global market competition.
Ethereum is known for its high fees. Although this may not seem like a big issue at the beginning, it can lead to financial losses and negative consequences for your business. You literally have to give away part of your fundraising proceeds instead of dedicating them to your project.
Ethereum has no fixed maximum supply. This is the reason that each time a new coin is born, the price of 1 ETH decreases.
Ethereum’s activities lead to the liquidation of the amount of cryptocurrency that has been raised and left on the market. The price for Ethereum decreases, and you lose money.
A great solution is impossible without great developers. Here, the Ethereum platform suffers once again.
Solidity, a language for creating smart contracts, is relatively new and unknown. It is used on different blockchain platforms, and Ethereum is one of them. There is no proper detailed documentation on this topic. Tutorials are rather poor. You either find outdated information or resources describing only basic information — enough for interested developers to write a ‘Hello, World’ program. But there is a very limited number of specialists who can contribute to language development or serious product development.
The language is rather new, and, no doubt, it will keep on improving. Until then, it is still quite risky to connect a business to this network.
As mentioned at the very beginning of this article, Ethereum has experienced trouble with security. Data breaches led to millions of dollars in losses. On this platform, many businesses lost everything. Let’s take a look at one more example.
In 2017, the Veritaseum ICO project became the victim of a damaging hacker attack. 36,000 tokens were stolen. They passed 6 freshly-created addresses before the liquidation. The Veritaseum founders claim to have since gotten 99.93% of the tokens back. Although the attack was unsuccessful, the consequences could be damaging.
After all the security issues, it becomes a huge question whether you should start your ICO on Ethereum or on some alternative platform.
3 Ethereum Alternatives for ICOs
As you can see, due to its disadvantages, Ethereum is not a very good option. What else can you choose? Let’s take a quick look at three great alternatives for your ICO launch.
This is a blockchain-based protocol for token exchange. It is an open-source solution, so you can have a quick look at it whenever you want to try it for your business.
Stellar’s Key Advantages:
- Good transaction confirmation time. 3 to 5 seconds — this is how much time Stellar needs to exchange money, tokens, and government-based currencies.
- Low fees. One of the Stellar network’s requirements is transaction fees. The fee depends on the number of transactions and basic pricing. Currently, it is 1 cent per 100,000 transactions.
- Unlimited opportunities for improvement. The considerable advantage of this network is that it was developed using C++, Java, and Python. Most software engineers are familiar with these technologies, so further improvement is quite possible.
Waves is a great, consistent ecosystem for solving blockchain-related tasks. Here, you can create a wallet for different currencies, raise your funds, and remain confident in their security. Daily trades reach around $6.3 million daily.
Waves’ Key Advantages:
- No security issues. There are no security issues on Waves platform as of yet. However, last year, there were some concerns about the centralized order matching.
- Transaction speed. Waves demonstrates great results, and translates up to 6,000 transactions per second. Thus, you can have your token ready in 1 minute.
- Great for a non-tech-savvy person. This is a great option for entrepreneurs who don’t want to involve the development team in their ICO creation. Following a simple tutorial, you can reach the expected results and start your ICO with no coding experience whatsoever.
The platform operates based on the Proof of Authority algorithm. This means that no mining is required to protect the network. Security relies upon a group of ‘validators,’ who make sure only valid transactions are added and processed.
LindaX supports a variety of protocols. It is a good choice for corporations that already have their own tokens, or decide to create tokenized digital assets. Its great scalability allows you to support an unlimited number of business partners.
LindaX’s Key Advantages:
- High TPS. LindaX is able to conduct around 180 transactions per second.
- Decreased transaction fees. This platform suggests more attractive transaction fees than any other similar solution on the market.
- Reliable platform. With LindaX, you get a one-of-a-kind opportunity to create a token that perfectly suits your needs. This is a place where you can also ask for a consultation, find the right direction, and build fruitful business relations.
Losing popularity as a peer-to-peer cryptocurrency exchange platform is inevitable for Ethereum. Fortunately, there are many other reliable solutions that can provide a better level of security, attractive pricing, and many other additional advantages. Secure your funds and the future of your business — choose a better alternative.