The Future of Ethereum Sucks, and I Feel Fine

Ethereum is going to eat the global economy. The price of that growth, however, is going to be a slow drift away from the decentralized, fully open ideal we started with.

AccessTimeIconMar 21, 2022 at 6:12 p.m. UTC
Updated May 11, 2023 at 4:52 p.m. UTC
AccessTimeIconMar 21, 2022 at 6:12 p.m. UTCUpdated May 11, 2023 at 4:52 p.m. UTCLayer 2
AccessTimeIconMar 21, 2022 at 6:12 p.m. UTCUpdated May 11, 2023 at 4:52 p.m. UTCLayer 2

Technology ecosystems tend to take off when the technology matches the use case and solves a really important problem. This works even if the technology itself can be a little clumsy. Yet sometimes new use cases will arise based on the fact that the platform is widely available, even if it’s not an ideal fit. We can expect the same for Ethereum.

We have an everyday example of this already. The internet is a fantastic network for sending data. It’s terrible, however, at getting it there in a very timely manner. Packets go off in all different directions and are likely to arrive out of order. The system is efficient, but it wasn’t necessarily designed to be fast, and it wasn’t designed to be able to discriminate between time-sensitive video content and text-only emails.

Paul Brody is EY's global blockchain leader and a CoinDesk columnist.

Early internet users and architects would have been horrified at the idea of real-time voice and video conferencing on the network. They would rightly have said the network isn’t designed for that and probably encouraged you instead to use a circuit-switched system that guaranteed bandwidth and availability. We experience the shortcomings of the internet’s traffic model nearly every day, as users drop in and out, audio breaks up and video stalls. Thanks to Murphy’s Law, this will only happen when you’ve said something especially brilliant or funny, however.

How then did we all end up spending eight hours a day on video calls during the pandemic on the internet? The answer is that it’s the network we have in our pockets and in our homes every day, and it’s connected to general purpose programmable devices, like computers and smartphones. And while it’s far from optimal, it’s much easier than fixing the legacy circuit-switched telephone network to support video calls and streaming media.

I believe this pattern will recur with Ethereum. Millions of users now have blockchain wallets and accounts. They have stablecoins and cryptocurrencies and access to digital contracts. They represent a ready market of investors and buyers with a demonstrated willingness to try new things. And that may, in turn, become more important than using blockchain technology for use cases that are ideally decentralized.

The result is likely to be quite a few new use cases that could be better executed in centralized ecosystems but that will instead be launched on public, decentralized blockchains. I’m already seeing some of these come up during conversations with clients. It is already happening in some respects, as many people are buying non-fungible tokens (NFTs) only to discover they don’t own anything other than the NFT. “Owning” this item doesn’t mean they truly own the copyright, any more than I “own” the music I have “purchased” online.

Two predictions

While I cannot predict how use cases are likely to evolve, I can make two predictions about how I think the future of Ethereum may well shake out. First, I used to rigorously assess use cases proposed by clients against how well they fit with decentralized technology. If there wasn’t a fit, I tended to push back against deploying to the blockchain. By almost any standard, it’s faster and cheaper to build a centralized application than a decentralized one. No longer. Now, the value proposition is instead market access to hundreds of billions of cutting-edge investment dollars.

Secondly, as use cases evolve that stretch Ethereum beyond its core functions, specialized tools and systems will evolve to support those use cases, just as it did on the internet. Content delivery networks, advertising networks and multi-protocol-label-switching (MPLS) routers have all arrived to help the internet deal with the flood of voice and video. Similar analogues will arise in the blockchain ecosystem. We’re already seeing a flood of startups designed to help build decentralized autonomous entities (DAOs) and NFT ecosystems. Many more are on the way.

For the idealists (including me) that populate the Ethereum ecosystem, some of this is going to be painful. The truth about the internet is that it’s the most successful network in history, but it’s far from the early ideal. It’s now sliced up with restrictions, national barriers, insecure security systems and “privacy” technologies that leak sensitive personal information. Compared to the global barrierless decentralized network we started with, it kinda sucks, but it's also impossible to go back.

Software is eating the world. Ethereum is going to eat the global economy. I believe it will make us all bigger and better stakeholders in our shared future. The price of that growth, however, is going to be a slow drift away from the decentralized, fully open ideal we started with. The benefits will outweigh those costs, but with careful design choices, the damage of that drift can be limited.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

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Paul Brody

Paul Brody is Global Blockchain Leader for EY (Ernst & Young). Under his leadership, EY is established a global presence in the blockchain space with a particular focus on public blockchains, assurance, and business application development in the Ethereum ecosystem.