The Dominance of Ethereum: Why It Has Already Won in the World of Blockchain
As the Ethereum public blockchain approaches its 10th anniversary at the end of July, the discussions surrounding its potential success as the foundation for global commerce and finance seem redundant. The truth is, Ethereum has already emerged as the victor in the realm of blockchain technology. It’s just that some are yet to realize it.
Despite being labeled an ETH “maxi” for over a decade now, my belief in Ethereum’s supremacy remains unwavering. My journey with Ethereum began with Vitalik Buterin, and as a former IBM executive, I showcased IBM’s initial venture into blockchain technology at CES in January 2015. The evolution of Ethereum has been a fascinating ride for me.
The Pattern of Technological Platforms
Blockchain platforms like Ethereum are fundamentally technology platforms, although they are often perceived as financial systems. When we analyze the history of technology platforms, we observe distinct patterns that Ethereum consistently aligns with.
One prevailing pattern is the winner-take-nearly-all model in the technology industry. Just as IBM dominates the mainframe software sector and Windows reigns over desktops, Ethereum has established itself as the leader in the blockchain domain. This phenomenon is driven by two key factors: zero marginal cost for adding users and the amplifying effect of network effects.
While there are arguably superior blockchains from a technological perspective, the history of global standards underscores that the best technology doesn’t always emerge victorious. Instead, platforms gain traction when they reach a threshold of adequacy for specific use cases, such as payments and NFTs.
Why Ethereum Stands Out
Although there are several thriving blockchain ecosystems, Ethereum’s transition to proof-of-stake and the development of the L2 ecosystem have solidified its position as the frontrunner. While other chains have emerged, none have come close to challenging Ethereum’s dominance in the smart contract ecosystem.
Similar to Microsoft Windows’ ascension in the desktop computing arena and IBM’s stronghold in the mainframe business, Ethereum’s trajectory towards long-term dominance seems inevitable. The blockchain landscape is characterized by foundations rather than corporations, allowing unsuccessful networks to persist without shareholder pressure for profitability.
The Inevitability of Ethereum’s Leadership
Looking ahead, it is evident that once a technology standard like Ethereum solidifies its position, displacing it becomes exceedingly rare. Windows has maintained its supremacy in desktop computing since 1984, while IBM has reigned over the data center market since 1964. Ethereum is poised to retain its status as the premier blockchain ecosystem for decades to come.
Disclaimer: The opinions expressed in this article are personal and do not reflect the views of EY.