Everyone is now talking in crypto! From the teenagers in highschool to the traders in wall street. This bloom could be considered one of those bubbles, which of course is a good thing because like every normal bubble, it attracts attention and good investment which breeds real innovation. This should be the case with the crypto bubble, however crytocurrencies have ascended to speculative values that preclude any speculative uses. They have hence hindered innovation with its increased price.
It is true that most ‘crypto tokens’ are glorified hash values stored on the ethereum blockchain so that they can be easily transacted. This obviously will mean that an increase in price of ether skyrockets to more than $1000, transaction fees will also increase( average ethereum transaction is now around US$2.50).
These fees are driven by by supply and demand and this is not only applicable to the ethereum. Blockstack’s DNS uses the bitcoin blockchain as its source of derivation, and the bitcoin transaction cost have also gone through the roof.
Now, how does this affect innovation? If you are speculating trading a couple of hundreds or tousands of token at a time, it is probably fine. But if you try building an app that people use anything else, this might certainly become challenging. If you are trying to build a decentralized name/identity service, your name now cost more than any top-level internet domains that automatically resolve in browser. So building anything high volume atop an ethereum token is a recipe for disaster as the entire business model will crash. Right now, we wait until the bubble burst before any cyrptocurrency experimentation and innovation can continue. Or if the ethereum finds a way to scale down such that transaction fees plummet.
What would be the way forward? Would lower fees be viable in the long run? Will only fee-free decentralized apps have a chance of succeeding in the consumer market? Wouldn’t this just lead to spamming blockchain transactions in the absences of fees?
Research is ongoing to see the feasibility of scaling ethereum and hopes on them remain optimally high.
In conclusion, whilst most non-speculative token projects are in the forecast for hibernation, the bubble could be popped and have no doubt that this will indeed be for the good of all.
