Author | Mu Mu
More than ten years ago, almost no one expected that a document of only 9 pages and a small software of only 14MB could cause such a huge storm. In the eyes of many people, the history of Bitcoin's "rise" is as magical as "turning stone into gold". Many people have not yet come to their senses, but it really happened.
Today, Bitcoin has grown from an insignificant "air" to one of the world's leading financial assets, making it unattainable. Perhaps in the future, most ordinary people will be further and further away from Bitcoin and its successor Ethereum...
The number of large institutions holding chips is increasing, and the supply and demand relationship will be tense in the future
In the previous article of the Vernacular Blockchain, "What are the whales on the Bitcoin "Rich List" doing now?", we saw that among the known Bitcoin whales, there are already many giants outside the crypto industry. Despite the bear market cycle of crypto assets, it still cannot stop the determination of traditional financial giants to make layouts. In recent years, institutions such as BlackRock, Fidelity, Vaneck, WisdomTree, and Invesco have submitted Bitcoin and Ethereum spot ETF applications to the US SEC. Behind the actions of these "giants" with a volume of more than tens of trillions is that crypto assets such as Bitcoin and Ethereum have grown into "alternative assets" that global investors cannot ignore, and are an indispensable part of their global diversified asset allocation strategies.
Of course, the application for spot ETFs for crypto assets in the U.S. stock market has also attracted much attention in the crypto industry, and it is also of great significance to the crypto market.
More and more institutions, including listed companies, private enterprises, and asset management giants, are entering the market to hold chips. In short, the interest of institutions, including the big clients who provide funds behind them, in crypto assets has only increased. However, the total amount of Bitcoin is limited and the supply of Ethereum has entered deflation, so the future supply and demand relationship is obvious.
The rules of the game are changing, and the market's voice will gradually shift to the hands of the giant whales. When the giant whales are fighting in the market, ordinary people seem increasingly insignificant.
The threshold for public chain nodes is constantly increasing
As the computing power of the Bitcoin network continues to hit new highs, the threshold for block producers is getting higher and higher. There is no doubt about this. Bitcoin mining has already reached the height of the chip technology war, and the Bitcoin computing power war has also, to a certain extent, continuously forced the development of chip technology. Of course, there is also one of the most fiercely competitive resources in human society: energy. Bitcoin's energy consumption has already rivaled that of a country.
On the Ethereum side, although the consensus mechanism has been converted to a low-energy-consuming PoS mechanism, the threshold for node membership has not actually been lowered. Some time ago, Ethereum developers were discussing a proposal to increase the validator stake limit to 2048 ETH, with the following reasons:
1) The expansion of the validator set has a negative impact on the Ethereum network (efficiency in terms of finality);
2) Reduce the burden on large node operators (Lido, Coinbase... need to manage tens of thousands of nodes at the same time). In short, Ethereum's POS stakers can start to reduce costs by increasing the amount of stake. Validators with low stakes will find ways to increase their stakes due to their low input-output ratio, thereby raising the threshold.
Just as the threshold for Bitcoin nodes continues to rise due to indirect investment in computing power and continuous chip updates, the amount of funds directly invested by Ethereum PoS validators is also raising the threshold, making it difficult for ordinary people to obtain full returns.
The cost of on-chain has soared, and users have turned to Layer 2, 3, and 4...
With the large-scale adoption of Web3 in the future, and high-frequency scenarios such as small payments, games, the metaverse, and social networking, the Bitcoin and Ethereum main chains may be "crowded" at any time. In the past, the on-chain fees that ordinary users needed to pay for small swaps, social networking, games and other interactive activities were already quite expensive.
At the same time, in the future, there will be more and more fierce competition in Layer 2, 3, 4 and other upper-level public chains. In the future, ordinary users' daily interactions or most chain operations can only enter Layer 2 and higher layers, which have lower costs and do not sacrifice too much security. Finally, these upper-level public chains or some large-scale Web3 applications will pay high fees in the form of unified batch packaging to conduct expensive settlements on the Bitcoin and Ethereum main networks, thereby distributing the chain costs of ordinary people in disguise.
Of course, Layer2 and Web3 applications do not necessarily charge BTC or ETH native assets as handling fees. They can also charge their own tokens or USDT, or directly charge fiat currency to provide services to ordinary users. Therefore, ordinary users do not necessarily need to hold BTC and ETH, and do not need to bear volatility risks.
Account abstraction means users don’t even need to participate in the interaction process
For most ordinary people, in the era of large-scale adoption of Web3, crypto wallets with high operating thresholds are not necessary. In order to solve the user threshold problem, the crypto community has proposed account abstraction in recent years. In the future, Web3 and metaverse applications will directly contact users. These applications will use application protocols, encryption algorithms and other solutions. Complex things such as chain-up and interaction will be "handled" by Web3 applications with one click. At the same time, encryption technology is used to protect users' assets, privacy data and other rights and interests from infringement.
In this way, most ordinary people don’t even need to know about the underlying blockchain technology, they just need to know that the service is guaranteed.
summary
With the entry of more and more giants, the rules of the game in the crypto market are being changed. The participation threshold of public chains, especially those with huge ecosystems such as Bitcoin and Ethereum, is getting higher and higher. In addition to the node costs mentioned above, there are also on-chain usage costs. It is also very difficult for developers to develop ecological projects and participate in the competition.
As the large-scale underlying public infrastructure of Web3, major native crypto assets such as Bitcoin and Ethereum will also become special resources like gold and oil, competed for by the "rich", and most ordinary people may find it difficult to reach them.
