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Ethereum Will Match Visa In Scale In a 'Couple of Years,' Says Founder (techcrunch.com)
Ethereum's founder, Vitalik Buterin, believes that his cryptocurrency has the potential to replace things like credit card networks and gaming servers. He even goes as far to say that Ethereum will replace Visa in "a couple of years," though he later clarified that "ethereum *will have Visa-scale tx capacity*, not that it will 'replace Visa.'" TechCrunch reports: "There's the average person who's already heard of bitcoin and the average person who hasn't," he said. His project itself builds upon that notion by adding more utility to the blockchain, thereby creating something everyone will want to hear about. "Where Ethereum comes from is basically you take the idea of crypto economics and the kinds of economic incentives that keeps things like bitcoin going to create decentralized networks with memory for a whole bunch of applications," he said. "A good blockchain application is something that needs decentralization and some kind of shared memory." That's what he's building and hopes others will build on the Ethereum network.
Right now the network is a bit too slow for most mainstream applications. "Bitcoin is processing a bit less than 3 transactions per second," he said. "Ethereum is doing five a second. Uber gives 12 rides a second. It will take a couple of years for the blockchain to replace Visa." Buterin doesn't think everything should run on the blockchain but many things can. As the technology expands it can grow to replace many services that require parallelization -- that is programs that should run at the same time.
Right now the network is a bit too slow for most mainstream applications. "Bitcoin is processing a bit less than 3 transactions per second," he said. "Ethereum is doing five a second. Uber gives 12 rides a second. It will take a couple of years for the blockchain to replace Visa." Buterin doesn't think everything should run on the blockchain but many things can. As the technology expands it can grow to replace many services that require parallelization -- that is programs that should run at the same time.
Founder is worried that his investment will become worthless if he can't convince people that it's the next big thing.
Ethereum currently does 5 transactions per second.
Wikipedia tells me VISA can manage up to 56,000 per second - and that was "a couple of years" ago, so it can no doubt manage more than that now.
So, in "a couple of years" the Ethereum processing is going to scale by a factor of (more than) 11,000?
If you think that's true then I've got a wonderful Olympic stadium to sell you...
He was misquoted, and in fact has explicitly said so on twitter that he was misquoted and provided his original quote:
http://www.globalcryptopress.c...
Even though this sounds outlandish, there is no doubt in my mind that if he says it, it will be true. Vitalik is a genius comparable to the likes of Newton, Leibniz, Lagrange, and so on. Years ago when bitcoin was in its infancy slashdotters were very eager to shoot it down as a non-starter that will never be worth collectively more than a couple thousand dollars. If anything, there is a very strong trend indicating that if something is laughed at at slashdot, it will be a great success.
The 10 minute delay for new block creation is to prevent blockchain forking so work isn't done on orphaned blocks, it's partly to correct for network latency. It is mostly a matter of hashing efficiency and also preventing the larger pools from forking the chain constantly. Ethereum corrects for this by allowing these blocks to be part of the reward, they call these 'uncles'. I suspect in the long term the 'uncle' concept will be Ethereum's down fall.
There is absolutely no doubt that use of blockchain technologies will continue to expand as more and more people develop solutions that use it. However, there is a world of difference between having the technical means to handle transactions in the volumes discussed, but this is entirely distinct from actually being able to compete with an institution like VISA, for non-technical reasons...
The global card payment processing infrastructure generates literally billions and billions of dollars of revenues for Mastercard, VISA, plus all banks. The resultant and incredible profits are further enhanced by insane "transaction processing fees" when purchases are made in any currency other than the card's default.
Do we think for a moment that the vast, established financial services industry will simply roll over and allow Bitcoin or Ethereum to displace it? No. This is why we see all of these grossly exaggerated claims regarding crypto-currencies - that it is used only by drug dealers, paedophiles and terrorists. Of course, these arguments conveniently forget the fact that actual paper cash is even more anonymous than crypto-currency will ever be, yet we don't hear [most] of these organisations clamouring for cash to be withdrawn. [ Most: VISA have been pushing this for a while now].
As a crypto-currency becomes established and generates the infrastructure to actually make a dent on the current cartel of big banks, expect to see horror stories regarding the criminal use of it, expect to see all sorts of legislation to outlaw it being proposed. Expect to see scandals and stories like the Mt Gox exchange hack being trumpeted as reasons that cryptocurrency should be doomed.
On balance, I think the distributed ledger concept has a lot to commend it - it makes the financial infrastructure of the world much more robust - but the biggest challenge it faces will come from the entrenched players in this market - the big banks. Which, by the way, are already developing their own, proprietary and "closed" blockchain technologies... Fancy that...