Ethereum Now and Then: A 10-Year Look Back

Ethereum (ETH) Conceived in late 2013 and launched in July 2015. I started working on Ethereum in the summer of 2014, which makes it seem like 10 years in space. When such milestones pass, it can be useful to examine what we expected and what actually happened.

Chains and coins are spread rather than merged.

Blockchains have strong network effects, almost by definition. As such, one might expect there to be a few blockchains or a single blockchain where most of the end-user activity occurs. Ethereum was created in part as “one chain to rule them all”, as opposed to the practice of creating a new block chain for each new feature.

Social networks and stock markets show consolidation behavior – we find approximately one popular social network for one purpose (X/Twitter — text, Instagram — images, YouTube — video and so on). The United States has two popular stock markets. Most countries have one or none, with only the top 20 or so being truly globally significant. In contrast, there are around 2.5 million cryptocurrencies – a five-fold increase from 2021. While many of these coins and chains may not see serious use, there are more than 50 with a market cap in the billions as of September 2024.

Related: Pick up memecoins – you won't fuel the next bull run.

Blocks and coins built on top of them are relatively easy to build and finance, so it makes sense that many of them are popping up. Ethereum greatly facilitates this activity, reducing the launch of a new token to a small code snippet or even a few clicks. Private investment often chases hot areas, with tons of funding going into a particular category – things like AI and blockchain, or things like ride-share companies in the past.

We usually see consolidation occur when one to three winners take most of the market share and other players buy or go out of business. In contrast, blockchains and blockchain-native tokens are incredibly resilient, with some projects lasting forever even if they are not actively developed. And some are coming back — Dogecoin (DOGE), for example, had a long quiet period but has seen a resurgence of activity since 2020.

The “markets for everything” thesis has not been made (yet).

In the year In 2014 or so, every long discussion about the unrefined nature of blockchain technology will eventually turn to killer markets — markets that allow speculators to bet on someone's death. Kill markets actually made their debut in 2018, but they don't seem to have had a sustained presence. Blockchains have become popular in areas where prediction markets have become popular – elections and sports – have been very slow.

Interestingly, decentralized on-chain insurance is still conceptualized but still seems to be on the horizon. One can imagine an infinite number of micro-insurance markets – Will my train arrive on time? And if not, can I be compensated? But just being able to survive in these markets is not enough. People aren't interested enough in these markets to implement them – yet.

Institutional adoption has taken place differently than some might expect.

Institutional adoption is more about new assets than transitioning business processes, while older assets are slower to move up the chain than expected.

In the early days of the tech industry, it was common for the government (defense, in particular) to be your first customer. Institutions with wallets hire technologists who work with less-than-usual products and produce better results than what was used at the time. This could be a path to adoption for blockchain technology, especially given the strong interest from existing financial institutions.

Related: Ethereum Gas Fees: Too Low or Too High? No one can decide.

Instead, the use cases for large institutions that have been successful in numbers are skewed toward the consumer. The technology is perhaps too transformative and difficult for older players to adopt to mainstream business processes. While brands like Nike have a staggering $185 million in non-trafficking token (NFT) revenue, the iShares Bitcoin Trust is managing something north of $20 billion.

Startups have had more success bringing legacy assets on-chain than legacy institutions. With a market capitalization of $120 billion, Tether (USDT) is a clear success story. Major financial institutions have much more AUM, with BlackRock leading the way at $9 trillion. Relatively few have moved on the chain to date.

The industry didn't shake out the way I expected. It was strangely disappointing and surprising in others. In the year In his 1997 shareholder letter — the year Amazon hit $150 million in revenue — Jeff Bezos referred to the Web as “the global giant.” With a mix of pragmatism and optimism, we can all make it.

Kieran James-Lubin is CEO of BlockApps and developer of the STRATO Merkata Protocol and Marketplace. Born at the time of Ethereum's launch, BlockApps has worked with some of the world's largest enterprises and governments to raise nearly $50 million in investment. Kieran holds a BA in Mathematics from Princeton University and was a PhD candidate in Mathematical Physics at UC Berkeley before starting Block Ups.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.