Cryptocurrency Price Plunge Highlights Ethereum's Shortcomings

Gas prices on Ethereum have spiked to their highest level in more than a year. Prices tanking across the entire industry have investors rushing for the exits and driving the cost to use the network up.

After a rocky week or so, cryptocurrency prices made some of their most dramatic moves to date today. The market capitalization of all digital assets plunged as investors sold off almost $50 billion worth of digital currencies in a matter of hours.

Drops of 20 percent or more over the last 24-hours have seen the likes of Bitcoin temporarily fall below $6,000. Meanwhile, the native digital asset on the Ethereum network, ether, is currently trading for just $140 after starting the month at more than $220. In fact, literally the only digital currencies not reeling from today’s drops are stablecoinsOne of the perceived drawbacks of cryptocurrency is the price volatility, value wildly spikes and falls, discouraging many people from... More like USDT, DAI, and USDC.

The rush for the exits has not only caused prices to tank but also fees to skyrocket on the Ethereum network. According to data from cryptocurrency analysis firm Glassnode (@glassnode), the median gas price is now at 29 gwei:

The gas price rises when block space on Ethereum is in high demand. Given that gas powers the decentralized applications built on Ethereum, gas volatilityWe can describe volatility as how much the value of an asset changes over a given time. A volatility index... More plays havoc with many projects’ business models.

As BeInCrypto has previously reported, surging demand for Ethereum has seen the network grind to a halt before. The example of the popular Ethereum-based game CryptoKittiesWhat are Cryptokitties? Cryptokitties are a user-friendly way to experience blockchain technology with a virtual cat game. They were one... More in 2017 showed the network’s shortcomings at the time. Today’s surging gas prices once again demonstrate that the network still lacks the capacity to facilitate the kind of enterprise adoption many are hopeful for.

According to Glassnode Studio, median gas prices just yesterday were around 9 gwei. At around 2.5x that today, the user experience at any decentralized application continuing to actually attract users on such a traumatic day in the markets will have surely been negatively impacted.

Upgrades in the form of Ethereum 2.0 aim to address fees in the future. Evidently, such changes are sorely needed if the smart contract platform is to ever make good on its ambitions as serving as decentralized world computer.

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