Last month, cryptocurrency market capitalization reached a record high of $91 billion following several months of continued growth. Experts estimate institutional and private investors in cryptomarkets to be between 2.9 and 5.8 million users, internationally. Streams of fiat investments from prominent institutions and venture capitalists have been flooding into the cryptospace to fund the technological infrastructures underlying the digital currency boom. This combination of dynamic market growth, explosive user interest, and intrinsic values of digital currencies that are being discovered has highlighted the already entangled scalability debate facing many blockchain platforms.
Although the ability to scale is proving to be a rite of passage that all cryptocurrencies will have to face eventually, a different type of scaling problem has been brought to light this past month; how can the infrastructures that already exist support continued user growth in their current forms? Recent events suggest, “not very well.”
If you tried to partake in the Basic Attention Token (BAT) sale yesterday, you may have encountered some technical difficulties. The culmination of world-class expertise and empowering new technology catapulted the token sale into a class of its own, breaking profitability records as well as crushing the ever-shortening sell-out time threshold. Ether was the only digital currency accepted during the buy-in. The high volume of users attempting to participate caused several blockchain explorer sites to render Ether data inaccurately. Glitches were prevalently reported on: Etherscan, the live stream of which froze; Ethstats, which completely crashed; etherchain, which experienced excessively slow load times or complete load failures; MyEtherWallet, which accepted transactions but failed to upload them into the blockchain for hours; ether.camp, which had loading failures; and ethermine, which experienced lag in acknowledging self-mined blocks. This exacerbated user woes during the crowdsale and caused waves of resentment in online forums. Bottlenecks created by high user volumes haven’t just plagued individual investors. Recently, the popular and well-funded cryptocurrency exchange Coinbase was crashed offline by “unprecedented” levels of trading interest. At the time of this publication, the company’s status report still lists Ethereum, the world’s fastest growing crypto, as having “partially degraded performance” on its exchange.
High user volume crashing websites is nothing new. However, these instances are evidence that the cryptocurrency ecosystem may be outgrowing itself. With a new Ethereum market opening up in China; major platform overhauls like Bitcoin’s SegWit2Mb or Ethereum’s Proof-of-Stake; and ubiquitous adoption into global industries, demand for cryptocurrencies and their underlying technologies is likely to experience continued growth. Social factors may also be playing a role in crypto’s recent surge. Popular online groups like reddits’ /r/ethereum and /r/CryptoCurrency, and Facebook’s Ethereum Group will surely contribute to growing awareness, in addition to mainstream media finally catching on. It seems however you try to measure the cryptospace – you already need a bigger ruler.