According to Buterin, most of the underlying issues of the Ethereum Blockchain network fall under the following categories: scalability, smart contract safety, consensus protocol and privacy. Several network updates including the most recent Byzantium hard fork provided solutions in the four major areas.
At a Blockchain conference hosted in Taipei, Ethereum Co-founder Vitalik Buterin outlined the long-term roadmap of Ethereum development.
But, as Buterin noted during an interview with South Korean mainstream media outlet Joong Ang, it may take at least two to five years to truly solve scalability within the Ethereum network. Buterin said:
“I would say two to five, with early prototypes in one year. The various scaling solutions, including sharding, plasma and various state channel systems such as Raiden and Perun, are already quite well thought out, and development has already started. Raiden is the earliest, and its developer preview release is out already.”
In regards to scalability, the Ethereum Foundation and the open-source development community of Ethereum made significant progress with the upcoming launch of the Casper testnet and the introduction of Plasma, a second-layer scaling solution developed by Buterin and Bitcoin’s Lightning Co-author Joseph Poon.
Casper is a long-term scaling solution that employs a hybrid proof-of-work (PoW) and proof-of-stake (PoS) consensus protocol onto the Ethereum network. Currently, similar to Bitcoin, the Ethereum network solely relies on the PoW consensus protocol to maintain the network and to verify transactions.
As Christian Reitwiessner, the team lead for Ethereum’s Solidity and Ethereum C++ implementation, explained in a recent paper, solutions like PoS is necessary to eliminate the workload of users, nodes, and dependence on miners. Reitwiessner wrote:
“Scalability does not come from the fact that Blockchains are relieved from their load by creating a big number of smaller chains and moving the transactions there. Scalability is only achieved once a user does not have to verify every single transaction that is sent to the system.”
Structurally, Ethereum is different from Bitcoin because it operates as a platform for decentralized applications (dapps). Hence, Ethereum urgently needs a scalable network which can handle dapps with millions of users through PoS solutions like Plasma.
To improve privacy measures of the Ethereum network, developers of Ethereum integrated Zcash’s implementation of zk-SNARKs, to potentially settle anonymous and private transactions. The image below demonstrates a zk-SNARKs transaction processed on the Ethereum testnet. The transaction does not show the amount of the payment, recipient, and the sender.
Long-term price trend of Ether
JP Vergne, a professor at Ivey Business School, noted in a study that developer activity is the most accurate predictor of the price of a cryptocurrency. Vergne said:
“We found that the best predictor of a cryptocurrency’s exchange rate is the amount of developer activity around it.”
Ethereum is the only public Blockchain network and cryptocurrency in the market which comes close to Bitcoin in terms of developer activity and hence, given the introduction of innovative solutions such as Casper, Plasma, sharding, and zk-SNARKs on Ethereum, Ether price will likely surge throughout 2018.
Mike Novogratz, the billionaire hedge fund legend, stated that he sees the price of Ether growing by three-fold by the end of 2018.