Top 4 Reasons Why Ethereum May Ultimately Fail

Even though we’ve highlighted some of the criticisms directed toward Ethereum before, they are not the only issues the network has to address. It is disappointing to see such a prominent ecosystem hindered by technical issues, ideological decisions which can easily backfire, and other factors which may eventually spell disaster for Ethereum. Below are some of the downsides of which Ethereum users and investors alike should be aware.

4. Cryptocurrency ICOs are a Risk

Even though virtually every company or project looking to raise money wishes to conduct an Ethereum-based ICO, these crowdsales can have negative repercussions. A lot of these projects will eventually liquidate the amount of ETH raised and dump it all on the market. Not only will this affect the Ether price negatively, but it also shows Ethereum is merely a facilitator to raise funds, rather than technology in which these companies believe.

It is only a matter of time until the influx of cryptocurrency ICOs backfires on the Ethereum ecosystem. There is no guarantee that any of these projects have legitimate intentions, and any bad PR will automatically taint Ethereum’s reputation further. While it is true that Ether allows people from all over the world to invest in ICOs, there is never a guarantee for success.

3. Exploits and Weaknesses

Even though many companies have joined the Ethereum Enterprise Alliance, they are not necessarily aware of the issues this network has. We have seen two major exploits discovered and used, both of which resulted in massive amounts of funds being stolen. The first exploit was the DAO smart contract bug, and the second exploit showed how Ethereum has no secure multisignature wallet solution currently.  Immature technology often suffers from issues like these.

2. No Supply Cap

Contrary to what some people may assume, there is no official hard cap on the amount of ETH. While proof-of-work will be replaced by proof-of-stake in the future, Ethereum will continue to be inflationary as a result. Unlike Bitcoin, with its 21 million hard cap, Ethereum has no fixed maximum supply. This means the value of every individual ETH lowers every time a new coin is brought into circulation. In this regard, Ethereum is quite similar to fiat currencies, even though its level of inflation is significantly lower.

1. Not an Immutable Blockchain

The main selling point of Ethereum is how it provides blockchain technology and new features to the entire world. One of the primary aspects of using a blockchain is that this ledger creates an undisputed record of events which can no longer be altered once the information has been accepted and confirmed by the rest of the network. That is no longer the case for Ethereum, and it is surprising how few people recognize this important detail.

Ethereum’s developers introduced a hard fork after the DAO was hacked. This hack put a large amount of the available ETH supply at risk of falling into the wrong hands. The hard fork also removed the immutability aspect of the Ethereum blockchain. This means that any application or project built on top of the Ethereum blockchain could see part of its history or transactions wiped out if a similar incident were to occur. People looking for the immutable Ethereum blockchain should look into Ethereum Classic, which was maintained as an ideological opposition to this blockchain rollback.

  • SectorIV

    The article Is ETC biased.

    • Alfey

      It’s a fact though

    • Spike Spiegel

      this article is reality biased. there are zero tech-literate people who support ethereum. google ethereumfraud

      • chrisdbarnett

        “there are zero tech-literate people who support ethereum.” – Please!!! Behave!!!

      • Rich Beer

        Hmmm, untrue.

  • nate

    The “NOT AN IMMUTABLE BLOCKCHAIN” point is moot. If you say hardforks make a blockchain mutable, then nearly every blockchain is mutable. If there is enough miner/node/user consensus on software changes, then any change could be imposed on the Bitcoin or Litecoin blockchain just the same

    • Ken Silverman

      actually, you are right – all chains are immutable in that hard fork is really a different chain.
      Unfortunately the new chain maintains the same symbol, so therefore, the same-symbol-different-chain progression over time speaks to the attitude of the developers as it might pertain to new changes going forward after the split. With ETH – the attitude going forward is “we won’t tolerate contract exploits” however, we see that ETH now is a LOT more resistive to mutabiloity now – loos at the Parity hack, look at so many other hacks – were there any rollbacks? any split? no. So this comment is more for the AUTHOR – Eth is demonstrating to be not too mutable now right?

  • J. Pereira

    Point number 4 is true of any platform that allows ICOs. Also, that is a fallacy, as these ICOs don’t take just ETH, and often also take Bitcoin as funds. Ethereum is used as the platform to record the tokens, the fact that ETH is also used for funds is secondary. Also, many of these ICOs also lock in a % of funds in crypto form. Which means, that even if price goes up with people buying ETH to participate in ICOs, the ICOs then proceed to sell just a part of those assets (admitedly, often > 80%), but they normally retain a portion in ETH as well. Ultimately, the net trend is still in favour of the price going up. Not that the price is the only reflection of the technology’s worth, mind you.

    Point 3 is not an issue with Ethereum, its ecosystem is still evolving. Bitcoin took a lot longer to get multisig widely in use. Even if it was true that Ethereum lacks a multisig wallet, that is unlikely to be the case for long, and hardly a reason for its ultimate demise.

    Point 2 is equating token price with the success of the technology. Rivers have been written about this, and small inflation is not a problem, it reduces the scarcity of the underlying asset, and makes it more useful.

    Point 1 ignores the fact that no blockchains are really immutable, they merely aim to be. I suggest you search “immutability myth” and read an article by Gideon Greenspan – it’s worth it. Ethereum only forked because its community allowed it to – at that stage – and there’s no indication that it would happen now, or in the future. In fact, as the community grows, it’s increasingly less likely for that to happen. You could also claim Bitcoin has forked hundreds of times for every copycat that’s been launched, plus the recent debacles.

    There are valid points to make about Ethereum and blockchains as a whole, but in my opinion, the above points will hardly cause the demise of Ethereum. Now, if you’d like to talk about blockchain bloat due to smart-contracts… 🙂

    • Fred Johnson

      Like to hear your take on that please?

      • lmao right

      • and you’re smart enough to know to not be here for information lol entertainment only. and i am not a women, i used to have sex with the girl in the avatar and it was a random pic that i had close to 200×200 pixels one day i needed an av lol — go away from here! echoooo chambersssssss

    • Thanks for your well described opinion … nice work 🙂

      P.S.: There is a very promising project beside the cryptocurrencies … You’ll find it at my website or in my profile …

  • Ken Silverman

    THE TRUTH ABOUT INFLATION (I requote myself): The level of new coins can be compared to any new coin including bitcoin when it was only two or three years old as well. that is because one can look at it like this, before reaching any market cap, x% of coins are produced per year. Now while btc was producing 14% new coins a couple years ago, it was still skyrocketing in value. Ethereum will be producing only 1% new coins per year or less, once Proof of Stake is implemented, sometime in November. Far less than what bitcoin is currently at, Somewhere around 4.5% I believe, recently cut from 9%? (Math for btc: 12.5 btc per mine * 52,000 mines per year) = 657,000 coins / 16 million total coins = 4% rate right now.) ETh is at 14% right where BTC was just two short years ago. Eth will be at 1% in November. FAR less than btc is at now. Those facts are important. eth will surge in price as soon as Raiden is released for it.

  • Ken Silverman

    IMMUTABILITY: Let’s explore this concept as it pertains to investors. While all chains are immutable in that a hard fork is really a different chain, it is always the new “winning” chain (highest block height) that maintains the same symbol, so therefore, the same-symbol-different-chain progression over time speaks to the attitude of the developers as it might pertain to new changes going forward after the split. With ETH – the attitude going forward is “we won’t tolerate contract exploits” however, we see that ETH now is a LOT more resistive to mutabiloity now – look at the Parity hack, look at so many other hacks – were there any rollbacks? any split? no. So this comment is more for the AUTHOR – Eth is demonstrating to be not too mutable now right?

    • Spike Spiegel

      eth is only immutable against public, eth is 100% centralized and mutable to ethereum foundation which they use to push untested code and constant bugs that enter the platform. you should look up why btc and other crypto devs allow others to opt-in on the changes and not opt out like eth does, it’s literally 100% centralized the way eth does it. and they have premine AND ICO funding to hold hostage like they do, so if you disagree, you get nothing.

  • TruthHurtz

    “We are talking 100% agreed consensus”

    This statement doesn’t reflect actual history, it reflects your ‘version’ of it.

    See Reddit, /r/ethereum/comments/4q1t9j/eli5_current_drama_with_ethereum/d4pmlid/

    The top comments at the time of the fork were almost totally against it, and agreed that any modification of the protocol would reflect that code was certainly ‘not law’, and make the ‘immutable smart contract’ irrelevant.

    You enjoy rewriting history, though, seems to be a common modus operandi of apologists.

    See also Reddit, /r/ethereum/comments/4oithy/a_too_big_to_fail_political_hard_fork_is_very/

    • Spencer Rhodes

      The difference was that the DAO funds were effectively locked for a period of time after transfer, which gave the community time to work out a response, which ended up being a hard fork. 100% consensus is an impossible expectation in any community with a population greater than one. The opponents to the idea had perhaps valid concerns, but they were a slim minority, or we would have ETC teasing the $400 mark instead of ETH.

    • Ken Silverman

      The larger point here s that an even MORE senseless irresponsible contract was just exploited with Parity – but there is no roll back is there? No Ethereum 3 is there? I think, while even though the Parity exploit would have been harder to contain with a fork, Ethereum developers are slightly more hardened now … Now to your point on history. I did not mean they agreed to the fork. I meant that all agreed that the contract was used in a way that was not intended. Even if 100% voted against a fork, bet you cant find me one person in the DAO (inclusive of the developer but exclusive of the thief ) who intended the use of the contract in that way. The point is not to rehash agreement to fork or not – the point is that a strong argument for a fork is that NOBODY (except the thief) intended its use in that way. One might also ask, how many people “lost” because of the rollback on valid transactions happening around that same time. How much was lost or would be lost if a fork occurs? I don’t agree or disagree with the fork. I just state an obvious fact about now – Ethereum appears HARDER, more IMMUTABLE now than before. (Obviously nothing is truly immutable because a fork can always happen that takes with it the symbol if it “wins”, so degrees of immutability based on experience is actually a worthwhile discussion)

      • Spike Spiegel

        it’s possible 4+ eth devs invested in DAO printed themselves money in last one , and they didn’t lose any money now so they didn’t this time. there was 0 evidence of support for bailout last time. eth is centralized with codebase control, with premine, with ico funding, with exchange relations, it’s a freaking company not volunteer group – it’s more centralized than paypal in deciding what changes get pushed in MINUTES like dao bailout. google ethereumfraud, google etheruem chain of liars and thieves, it’s well documented events, 0 speculation, 0 debate possible to argue anything but eth being 100% centralized

      • FakaLakaDingDong

        There is no such thing as “more” or “less” immutable. It is either immutable or it is not.

        • Ken Silverman

          Agreed, but to be more precise – NOTHING is immutable because ANYONE can start a hard fork which always takes at least “some mining power away, and if its “enough” ir can take the symbol too. Either way, any software “update” soft or hard, if it has ANY potential to take the “symbol” eth or btc with it – then it is NOT immutable. So, therefore, NOTHING is immutable – except God, death and taxes.

  • Interesting article to read, but I think Ethereum is here to stay.

    • FakaLakaDingDong

      Or is it?

  • Uhh

    #5. 72,000,000 Coin Premine.

  • Spencer Rhodes

    The developer community behind Ethereum is why is will ultimately succeed, despite all of the challenges it faces. The real news in the Parity multisignature wallet hack is not that a vulnerability was found, but rather how fast and effectively the community mobilized to mitigate the damage done and close the attack vector. A whole army of hackers hammered out scripts at a moment’s notice and saved millions of dollars worth of ether that belonged to complete strangers.

    • Spike Spiegel

      there are zero tech-literate developers in ethereum community as no good developers will choose to work on centralized blockchain. also bitcoin has more developers as can be seen on github and geko developer score. google ethereumfraud until you cry since you can’t find anything wrong.

    • FakaLakaDingDong

      That is interesting…

    • bummin now tho aint ya

  • BlueSuperEZ

    I believe ETH will survive, but not as a form of currency for payments for goods and services. Since its a way to pay for transactions, it’s akin to fuel for your car. I believe Ethereum will drive web 3.0, decentralized computing etc. and from that perspective alone I can’t see ETH dying off.

  • Borkdaddy Hamstan

    Oh wow, “Bitcoin enthusiast and freelance Bitcoin writer” bashing Ethereum then making a shameless plug on Ethereum Classic. Salty much, bud?!?!

    • Spike Spiegel

      even talking about ethereum as a decentralized blockchain is a lie and should be reason for jail time for fraud as it’s not. google ethereumfraud, try to find a single thing wrong. you can’t. there is zero evidence anyone in etheruem is computer literate.

      • chrisdbarnett

        Ethereum is a decrentralized blockchain. There you go. I said it.

        When I walk out of jail in 30 years time because I disagreed with Spike Spiegel we all know that out of ETC and ETH which one will be still around.

  • Black Dynamite!

    Well said, JP. Ethereum has plenty of holes in its game, and most of them are internal, not external. It has fewer natural enemies, and more potential mainstream partners than Bitcoin. However, better development and more forethought would prevent a lot of these preventable issues.

    Buterin should focus on not taking over the world, with unlimited tokens, but get the system down tight, then slowly expand. ETH has proven it is not ready for the world, yet.

    Remember this protocol is only two years old. You weren’t as sharp as a tack at two years old either….

    • FakaLakaDingDong

      ETH has been making a lot of noise in the news 24/7. That puts a focused target on their back. They’ve drawn in prospective entrants from all corners wanting to do smart contracts as well. ETH has many more natural enemies than Bitcoin.

    • Alex Koparanian

      you all are the illiterate ones just jumping to conclusions posting your for the most part, biased opinion and already have a set answer/belief or just believe everything you read meanwhile tending to only read articles from soirces who you agree a d share the same opinions as you do.. also you cherry pick excerpts from any given article and focus just on that short excerpt thats taken oit of context.. how is that right or fair to everyone else just b.c you dont like agree believe or had a bad experience dealing with the particular crypto or exchange and ultimatley lost out which angered you against the who compant and currency itslef which is 100% understandble i would be too.. but just because it happend to you does t mea the systems curropt failing or about to collapse and everyone inveated is going to loose everything b.c its simply not true.. in any given buisness, industry, market especially when it comes to investing your own hard earned money everyone investing better well know its a risk and can ei ther mame you money, sit barley fluctuating or completley failing due to a host of different possibilities and events resulting in a total loss of your investment but the chances of something catastrophic like that happening and affecting everyone is so far off and beyond unlikeley if that was the case i bet my car house and all my btc ltc and eth that it would be largley announced to try to help few ppl who acted quick eneough not loose everything like others could.. but sometimes in the case if every crypto and every exchange mistakes are and will continue to be made causing certain people to loose out big and others unexpectly gain big not knowing why or how

  • Spike Spiegel

    it’s not just MUTABLE (most blockchains are), it’s mutable by MINORITY as in less than 50%. In fact, eth was forked with only 4% support, and even there that’s based on a poll, but decision to fork it was done by <1% by developers in foundation and it was over in MINUTES because they put literally stealing money code into the codebase as DEFAULT setting. They then used centralized PREMINE and ICO funding to hold funding/updates hostage to prevent people from voting against them. google ethereumfraud or /r/ethereumfraud it goes over it quite well. ETH is literally more centralized than paypal with fewer people deciding what happens. it's the most centralized fake blockchain in existence much like onecoin, which makes it UNSECURE

    • Tim Locke

      I think you mean insecure, which is an adjective. Unsecure is a verb.

      • Spike Spiegel

        lol, I googled it and confirmed it is an adjective, in fact that’s first result that came up. I guess it was a prank. Nice.

  • Dick

    ETH is not a farce, its actually fundamentally better than Bitcoin which is driven by speculation

  • MarkTrak

    Don’t understand the relevance and link of the price of ethereum on the exchange vis a vis its adoption for smart contracts and store of value. Where is the business? I see no clients. I see no revenues. I see buyers of ethereum from those using fiat to buy it and the miners. But how does the growth of the community equates to the price of ethereum rising? Same original questions. Where are the customers? Where is the business? I see all cryptos as a virtual game. I see the rise in price devoid of basic fundamentals but full of hype and euphoral. Over cryptos that attract speculators and investors who is willing to buy high and hoping to sell higher but there is no other asset or revenue backing up the rise in price. It’s just a silly blinded perceived value given to it by mesmerised gullibles and the cunning smarts who hope to buy and sell it higher to that next sucker and this pool of suckers will grind to a halt as they look elsewhere for their fix. In conclusion, just this….Show me the value. Zilt!

  • Dominic Lacerenza

    The ethereum network will survive based solely on block chain smart contracts alone. The currency itself is just a biproduct of that. We’re not seeing people invest millions of dollars in the technology (JP Morgan and other fintech companies included) because it has no place and is going to fail. Although I think any real gains will be had with the DAPPS that run on top of it.

  • Wow! Can I guess who’s paying you?

  • Vincent Antler

    All Blockchain project that try to replicate a currency will fail (mark that please!). Ethereum was not meant to be a currency, it definitely has utilities and thus have value. What price it will be is irrelevant, I’d rather have ETH relatively stable at affordable price, thus maximizes utility for everyone. A good Blockchain project is not meant to be squatted/hodled, it is meant to be consumed, to be spent.. for utility . Bitcoin .. Blockchain community need to be more mature to accept that Fiat money will remain necessary and relevant and might be more transparent. I think all Fiat will be tokenized through Blockchain technology. Blockchain assets will stay and thrive, and so with Fiat. Hey, wake up! Inflation is as necessary as Tax (I myself hate tax and inflation, but without it.. the economy will collapse. It’s bad that everyone become Bitcoin squatters/hodlers/speculators where money collects and rotates/ centrifuges like a pool in a pyramid scheme, where values goes to the early squatters and pseudo-miners). Pseudo-currency will fail. Probably there will be a niche for anonymous cryptocurrency, but that will be of less significant market.

    • Teo Teodorescu

      bitcoin, eth and other altcoins are commodities. They are not money/currency. To be money, it needs to be drawn on a pool of available labour, with laws enforcing its acceptance and an army, laws, courts and police protecting a territory where the labour can do productive stuff. Anything else is a commodity, like gold, iron ore, cotton… And no, gold is not money either, whilst we are at it… 🙂

      • Vincent Antler

        Yes, gold and silver are not money. There’s a mathematical equation to determine how much money should be made. Thus interest rate is determined to allow economy to grow while at the same time the CPi remain stable.
        A commodity main qualifier is utility, it has to be consumed in order to fulfill needs. Gold silver and precious metal price is manipulated for a good reason. The price should remain low, and not subjet to speculative bubble. If their price soared, industry will be at risk. So if bitcoin really is a commodity it should be consumed and used, ideally the price should be low and stable. What happened if commodities like oil, corn, steel, etc soared due to horading or speculation? Disaster ? .. Admit it 80%of bitcoin hardly get out of it’s wallet and people are fighting and speculating over 20%of it. Not much utility really.