At the end of this month (July), Ethereum’s public blockchain will turn 10. In the Crypto world, it has been spent debating whether Ethereum will be successful and the foundation for the next iteration of global commerce and finances. All this speculation is a waste of effort. Ethereum has already won. The loser doesn’t know that yet.
I’m the infamous ETH “Maxi” and have been here for over a decade now, so you might want to discount my opinion. Just listen to me anyway.
Side note: Yes. Really. Over 10 years. Vitalik Buterin launched Ethereum and was his previous incarnation as IBM’s executive, showing off his first foray into IBM’s blockchain technology at CES in January 2015.
Blockchain is, first and foremost, a technology platform. We talk about them like they are in the financial system, but they act and grow like technology platforms. And when we look at the history of technology platforms, we can see some clear patterns that Ethereum tends to continue.
First of all, it’s a business that means getting a winner. IBM has 100% of its mainframe software business. Windows has 90% of desktops. Android covers around 90% of all smartphones. TCP/IP is approximately 99.9% of all network traffic.
This pattern is repeated as computing platforms have two factors that support all business models of winners. First, there is zero marginal cost from adding users. Additional users are mostly costly, so the network can add new users for free.
Second, the network effect means that more users will make the network more valuable, and as a result, it is very difficult (but not impossible) for Laguard to keep up with the leader.
In the early days of platform development, it is often easy for winners to come and go. Network effects are not a sufficient problem, and better products can drive away previous leaders. We saw early leaders in the world of PC and mobile devices (with Apple II, Commodore 64, and later Nokia and BlackBerry smartphones) escaped to the side on an impressive new platform.
However, in all these cases, the platform “type” was very new in itself (less than 10 years) and was also relatively low in widespread adoption (less than 10% of the general population). I’ve passed both of these metrics as I have my official 10th birthday on hand for Ethereum. In many accounts, over 20% of the US population owns crypto, and the blockchain platform is now over a decade old.
From a technical standpoint, there is a better blockchain than Ethereum. This is one of the global standard basic lessons. The best technology won’t win. From video cassettes to DVDs to mobile computing, the platform gains traction and “good enough” for certain use cases such as NFT payments. Many of the most successful platforms don’t really solve all the important issues, and they often pierce foot holes in use cases that they weren’t actually intended.
A proper case: The Internet itself was not designed for audio or video and has never actually fixed any issues with quality of service control. But that’s enough and that’s how we call these days, as we all have it.
Yes, but?
So, if Ethereum really won, you might be asking, why are there still so many other thriving blockchain ecosystems? I think there are two answers.
First, big network and technology leadership victory will not happen anytime soon. They appear completely and take years in the mist of battle, but it can be difficult to see who is pulling first.
With the move to demonstrating Ethereum’s proof and creating the L2 ecosystem, it is clear that the network has seen its biggest challengers, and is already steadily built into a dominant position. The second player goes back and forth, but by retreating Ethereum’s advantage, it now looks almost impossible.
Ethereum has long had a nearly 100% share of the smart contract ecosystem. As other chains have come online, Ethereum’s share of important measures like the Defi Ecosystem has dropped significantly, falling to a bottom at around 50% in 2023. Since then, it has spurred the success of the L2 ecosystem and has started to rise steadily again. The other single ecosystem doesn’t even have a 10% share of the total market.
This is not an unusual pattern. Microsoft Windows became the largest desktop computing platform in 1984 after a fierce battle in a busy market. At the time, it was still facing fierce competition with Commodore, Atari, Apple and more. Second, the Commodore, Atari and Apple II continued to sell well until the 1990s. BlackBerry sales actually continued to increase during the first two years when the iPhone was available. Only Macs survived the long-term PC competition.
In the mainframe business, the exit path has become even longer. IBM came to dominate the mainframe business in 1964 after the release of System/360. Unisys is a Global Comperitor created through the merger of Burroughs and Sperry (Univac Fame), and in 2015 it produced its last own hardware mainframe.
Second, the structure of the blockchain ecosystem itself further expands the “preserved life” of networks that have not been able to obtain traction. Most of these are run by foundations rather than by companies. Therefore, no shareholder can request profits on capital. As a result, there is no actual outlet pressure for unsuccessful chains. Hopefully we will continue to release minor updates and mountains of Ethereum-related concerns in X for a foreseeable future.
If there is one final lesson to take from the standard world of technology, it is: Once locked, it is surprisingly difficult and extremely rare for a leader to lose his top spot. Windows has been the desktop winner since 1984. IBM has been acquiring data centers since 1964. I would like to wager that Ethereum is the world’s outstanding blockchain ecosystem 50 years from now.
Disclaimer: These are the personal views of the author and do not represent EY’s views.
