There has been a difference of opinion between two key players on the key issues of the blockchain industry, namely scalability, and speed of the existing blockchain platforms. Vitalik Buterin, the creator of Ethereum and Changpeng Zhao, CEO of Binance, have different voice opinions regarding these issues.
Vitalik Buterin has explained to Toronto star that blockchain faces a significant issue in scalability that prevents them from reaching broad masses. He has emphasized that security, scalability, and privacy cannot be improved together if we go by the decentralized architecture of blockchain. According to him, security and data protection has been the concerned area for most developers, and they have ignored the scalability problem. The key issue is that every transaction has to be verified by every computer. This prevents the technology from being implemented in large organizations.
Changpeng Zhao (CZ) has tweeted that he likes Vitalik’s uterine and Ethereum, but the scalability problem has been resolved mainlyfor the new blockchain platforms. He argued that the problem is with the real-world applications of the technology. He said,” we need to focus on developing applications that can be used by a large number of people. Scalability is not a problem.” Buterin countered this by saying that the minimum transaction rate for even a semi-centralized blockchain is of the order of hundreds of TPS. The competitor of Ethereum, Eos, is already facing capacity bottlenecks. Therefore off-chain solutions do not provide reliable services. He also quoted Vlad Zamfir, Ethereum foundation researcher who said, “ blockchains are difficult to build, have no generalization and needs rethinking of initiatives at the application level.
An industry report says that capacity and speed issues have been resolved in the newer blockchain technologies such as Binance chain. But it is to be noted that Binance has achieved this by sacrificing decentralization, the main feature of the blockchain technology.
Also, the full picture is not known with the statement that newer blockchains have solved the issue. This is mainly due to the tradeoffs done to achieve speed. Newer blockchains such as Binance chain, Eos, Tron, etc. sacrifice censorship resistance and centralization to achieve scalability.
According to Buterin, Proof Of Work (POW) algorithms give importance to security rather than speed. The blockchain projects with thousands of TPS are akin to centralized garbage piles. Binance chain defended that EOS is the newer blockchain. EOS has high TPS of 2200. However, there have been controversies about EOS centralized architecture. XRP, a cryptocurrency handling 1500 TPS is also centralized.
Ethereum and Binance price analysis
Vitalik Buterin’s statement has led to a steep drop in Ethereum prices. He commented that Ethereum would face scalability problems as it is almost full. Ethereum has fallen by 8% in a single day, giving an ugly turn. This has also affected Bitcoin and Lite coin prices. Bitcoin has dropped nearly $900 in a single day; however it is better than the mid-July- August price.
Binance coin also has faced a sudden drop in prices on the same day. The price of Binance coin has dropped below $25 and has remained stable around that till the rest of the day. Despite this price drop, Binance coin remains the 6th largest cryptocurrency by market capitalization.
Binance coin price has been caught in a squeeze for some time, and now its price has fallen. The BNB price can continue to swing at $20, $21, $22 before a rebound. The close support is at $27.