While 2017 was a breakthrough year for Ethereum in terms of value, network effects and development which generated flippening talks (i.e Ethereum taking over Bitcoin’s reign in terms of market cap), 2018 has not been that kind.
This year we have seen the focus shift back on Ethereum but under a much different light. The scrutiny and arguments around scaling, utility tokens and the exuberant frenzy of ICOs has taken a toll on the ecosystem as a whole.
Recently an article from Jeremy Rubin at TechCrunch even questioned the economic model behind the platform currency suggesting an imminent collapse which quickly prompted replies from Vitalik Buterin and others at the Ethereum camp.
Asides from differing opinions about the underlying technology, fights between both sides and performance so far, Ethereum seems to have been following a similar trajectory to Bitcoin since its launch, while having many differences at a core level.
This is true not only in terms of technical development, but also most importantly, in terms of ideology. To provide some context, Bitcoin itself had many bubbles but perhaps the most well-remembered was the run to around $1,200 back in 2013.
That was the move that caught the attention of both Silicon Valley and Wall Street, the formal introduction not only to the tech giants and traditional finance alike, but also to retail investors, businesses and consumers.
As we all know, a long bear market followed. This was attributable in part because of natural price discovery factors inherent in a nascent asset but also due to Bitcoin’s immature technology, which was not able to handle nor deliver on some of its expectations at that stage.
This spawned a lot of new projects, popularly known as altcoins, which aimed to improve on Bitcoin’s perceivable shortcomings such as transaction speed and scalability.
It was with the birth of Ethereum in 2014 that the new wave of smart contracts began. There have been many projects with similar characteristics and objectives but Ethereum seemed much more ambitious and packed with potential, which quickly gained interest from different circles.
Ethereum also proposed and delivered a vision of digital economy and blockchain ecosystem under the same umbrella (even if at an experimental and primitive level) that Bitcoin once promised but only timidly touched on.
This encompassed ideas like smart contracts, DAOs, DApps, tokenized assets, decentralized identity, storage and processing power, prediction markets, digital central banks, logarithmic stable coins, shared liquidity protocols, amongst others.
After some similarly sized bubbles brought the value of ETH above the $20 mark, some controversies involving the DAO hack and subsequent hard fork (which gave life to Ethereum Classic) saw Ethereum experience one of its first major tests. New projects certainly were not flocking to build on it and many critics argued Ethereum would not survive these trials and tribulations. Lykke’s decision and own Open Assets Colored Coins implementation was heavily influenced by Bitcoin robust and impressive track record. One thing was certain, Ethereum was still a work in progress.
However, it was around the 2016-2017 period that some signs started to appear and mimic the previously mentioned similarities with Bitcoin. A new class of Ethereum competitor platforms started to appear, promising to be Ethereum’s killer, clearly drawing parallels to the same cycle Bitcoin endured.
Projects like Lisk, Waves, NEO (previously Antshares and literally known as the “Chinese Ethereum”), EOS, Tezos, ICON, Cardano and many others legitimized and exposed the virtues and flaws of Ethereum.
And while Bitcoin eventually recovered from the bear market and introduced developments like SegWit (not without drama) making some of its most obvious clones redundant and obsolete in the process, many others who followed the initial footsteps of Bitcoin such as Litecoin, Doge and Dash are still going forward supported by strong communities. Even so, Bitcoin remains the undisputed top blockchain project and the new ones trying to dethrone it like Bitcoin Cash became the exception.
One could argue the Ethereum price per unit has even retracted in a similar fashion so far (from above $1000 to just below $200 at the time of writing) and while it appears to be just another coincidence yet to be confirmed, it could prove to be another piece of the puzzle in hindsight.
It remains to be seen if Ethereum can hold its place as the main smart contract platform but unquestionably promising new developments are beginning to appear on that front. As the saying goes history (or in this case the future) tends to repeat itself.