Ethereum Predictions and Changing the World

Recent analysis of the Ethereum blockchain by Chainalysis has shown that one third of Ether in circulation is owned by just 376 people. This is a shockingly high amount, but does reflect an improvement on the 2016 statistic where 47% of Ether was owned by whales.

There are two main concerns with this. First, price manipulation is a large part of why Bitcoin has taken so long to be adopted by big institutions. They were worried about the idea of a small group of people being able to change the price and profit from it. However, it seems like even though these 376 people are responsible for 7% of all transaction activity for Ether, they are not causing major movements in the price. They do contribute to volatility during sell-offs, but that is not as big an issue.

The second concern is the centralization of wealth that will occur should Ether reach mass adoption and turn a massive profit. The original ideal was that cryptocurrencies would allow a redistribution of wealth away from the banks, and if all that means is that new whales get all the wealth, then the problem hasn’t necessarily been solved.

Scalability Problems and Implementing Changes

All of this comes at the same time as Ethereum co-founder Joseph Lubin is predicting that Ethereum is on its way to becoming 1,000x scalable over the next two years. This is a hefty claim and is based on the Serenity development to the ecosystem that is currently being advanced to the testnet stage.

According to Lubin, Phase 0 of Ethereum 2.0 is hopefully going to be functional by the end of this year. Ethereum 2.0, as this has been referred to, will allow for multiple ways for new chains to be connected with the old one, as well as having private transactions, and Proof-of-Stake (PoS) capabilities.

Predicting the Future

There are conflicting predictions as to when Ethereum 2.0 will be implemented. Lubin says within 18 to 24 months, but Messari CEO Ryan Selkis thinks it won’t be in place until 2021 at the earliest. Selkis spent some time highlighting the risks of the transition from proof-of-work (PoW) to PoS, since this will also make Ethereum the largest PoS network by far.

The main point he is making here is about PoW being a proven algorithm that nobody can really contest works. Ethereum is about to go through a massive transition and to understate the effect that may have is foolish. Ideally, it will bring more scalability, and sharding is planned to do the same, but these are still early on innovations whose future no one can predict.

This week has been full of predictions, as it is ConsenSys Week in New York City right now. Several projects have been unveiled, like Microsoft’s new Ion project, and spirits are high as Bitcoin had a big bounceback. One interesting prediction from noted Bitcoin bull Michael Novogratz is that Bitcoin isn’t going to be the innovation that changes the world. Digital gold is a use case it may very well win, but Web 3.0, which will consist of many different blockchain companies and altcoins, is going to be the world changer.