It took bitcoin eight years to reach a level of 200,000 transaction. For eth, less then two years were sufficient as the network now has reached a new high of 193,618 transactions in one day.
Ethereum’s transaction levels have quadrupled since March, rising from 50,000, with billions of dollars now transferred by the network, but what is all this money being spent on?
Eth’s blockchain is pseudonymous, with plans to increase its privacy through Zcash like technology, so we can’t really be sure of how money is moving and why, but there are some good guesses.
The vast majority of these transactions are probably individuals transferring to exchanges or withdrawing their funds to an eth wallet, with some transactions being individuals sending eth to one another either as a gift, to let others see and feel how eth works, or maybe in exchange for something.
A lot of these transactions are probably individuals buying ICOs or token sales, one of the hottest current trend with many such tokens usually only available through eth.
One such sale is Brave Browser’s much anticipated Basic Attention Token (BAT) ICO which is to start today at block 3,798,640 estimated to be around 8AM Pacific Time or 3PM London time.
Some transactions might just be traditional commerce. People are getting rich on eth, so instead of incurring fees and time delays by converting it into dollars, they might prefer to just spend it directly.
The infrastructure to facilitate this commerce is currently very limited for ethereum, but a number of business owners have been asking recently how they can accept eth for their services, presumably because they’d rather earn it, instead of buying it.
The current available options aren’t great, but there are some on the pipeline and we should expect Coinbase to start offering eth for their merchant services. They were one of the first companies to strongly support the platform last year, further seemingly eyeing token services, so it appears reasonable to think they’ll add eth for commerce, soon-ish.
Is Ethereum Growing Too Fast?
Can eth handle all this demand is a question we might start asking more and more as the currency adds 50,000 transactions to its daily volume seemingly every week.
It can comfortably handle around 1 million transactions a day, which should be plenty for this year, but a capacity increase will then be required to be provided in two ways.
The Raiden Network builds a new layer on top of ethereum for recurring payments services, such as say from an exchange to a merchant, and for microtransactions and smaller payments, bundling many transactions into one on-chain payment.
Proof of Stake and Sharding are to provide direct on-chain capacity, with the latter doing so by using only some nodes, say 100, for x portions of a transaction, to then combine all the 24,000 nodes.
That is, instead of each node holding exactly the same data, they are sharded, processing only parts of it, demanding less resources from each node, while giving the total network far more power.
Enough, really, for as good as unlimited scalability, according to Vitalik Buterin, Ethereum’s inventor. So even if eth grows above capacity this year, which isn’t really foreseeable, that lack of capacity would only be temporary.