What’s wrong with ETH?
by Maryna Trifonova, Head of Content at Jax.Network
The second-largest cryptocurrency by market capitalization Ethereum hit a new all-time high of $2,535 earlier this month. Many people invested money in this project and saw a drop in price to $2,100 per coin. Is ETH a good investment, and what can possibly go wrong? Read this article to learn more about this cryptocurrency!
Overview of ETH
We all know Bitcoin, the first and largest cryptocurrency in the world, which was created with the purpose of becoming global electronic cash. However, the more adoption it found, the more drawbacks became apparent. The biggest limitation of BTC is scalability. Based on a PoW consensus, it can only process 7 transactions per second maximum, so one simple transaction can take 10 minutes or longer. Ethereum is trying to solve this problem, but at the moment, it can process from 12 to 30 transactions per second tops.
Ether (ETH) is a native cryptocurrency of the Ethereum network, developed by Vitalik Buterin and Gavin Wood in 2013. Ethereum blockchain operates as a platform for many other digital currencies and is instrumental in the execution of decentralized smart contracts. Its primary purpose is to become a global platform for decentralized applications, allowing users from all over the world to write and run software that is resistant to censorship, downtime, and fraud. From cryptocurrencies and dApps to over-hyped NFTs, Ethereum has a wide range of applications. That is probably the reason why it’s so popular and maintains the honorable second place by market cap.
Limitations of ETH
It goes without saying that Ethereum is a well-reputable technology with millions of users around the world. But how long can its popularity last? Everything changes, and new technologies conquer the market. And with ETH’s obvious limitations, we won’t be surprised that it’ll be replaced faster than you can say Jack Robinson. Let’s see what major drawbacks are there and how they influence the network.
We’ve already mentioned the scalability issue, so we won’t stop here. There are more critical issues, for example, security failures related to poorly designed smart contracts, which hopefully will be fixed in the future Ethereum blockchain updates. But the whole switching from PoW to PoS process is a very complicated procedure. It can result in multiple breakdowns or, even worse — the crash of the entire system. So we face quite a dilemma here.
On top of that, Ether was created to fuel smart contracts that run on the Ethereum network. So, unlike Bitcoin, which is commonly considered crypto gold, Ether is used as a form of gas fees, meaning it describes the cost needed to carry out a transaction. And right now, these fees are pretty high, not to mention a tremendous increase in price when the network is busy.
How does Jax.Network differ from ETH?
Jax.Network has no intention to replace Etherreum, as our network is primarily dedicated to payments, while Ethereum focuses on dApps. However, given the recent DeFi boom, stablecoins and sound digital collateral have become in high demand. A fair chunk of stablecoins is built on Ethereum-based smart contracts now. So let’s analyze the main differences and see how JAX coins differ from ETH.
First of all, we have to mention that Jax.Network is based on the Proof-of-Work consensus, which is totally different from the PoS-based Ethereum network. Fundamentally speaking, although higher throughput can be achieved by moving the network to a Proof-of-Stake-based protocol, there are some fundamental flaws that should be taken into consideration.
A PoS network is a sacrifice on the decentralization that supporters of the Ethereum network champion. A more centralized network is not just a system wherein those who have more coins to stake will continue to accumulate wealth at an accelerated pace, but it’s also a single point of failure. In other words, intervention from third parties, such as a governing body, is now, in theory, possible. This fact should worry the users of the Ethereum network greatly, or at least more than a decentralized network where such a threat does not exist.
Apart from that, Jax.Network has low transaction fees, so transferring value using JAX coins is convenient and relatively cheap. Having adopted pure state sharding, we gained a lot of perks. Thanks to enhanced scalability, our transactions are carried out much faster than those performed via any other network, including Ethereum.
Summing everything up, we would like to emphasize that the Ethereum network was a revolutionary technology for the time when it was invented. However, if you are looking for a better way to carry out low-cost, fast, and convenient transactions, Jax.Network is something you really need to consider.
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