This article highlights findings from CoinDesk Research‘s new Q1 2017 State of Blockchain report, focusing on data from our ‘Bitcoin and Ethereum Sentiment Study’.
Click here to view the slides in your browser.
Click here to download the slides as a PDF.
There’s no sugarcoating it – the price of ether has been on a tear.
Since the start of 2017, the value of the ethereum blockchain’s native token has far exceeded its price at any time in the network’s short history.
Data from Q1 2017, however, showcases that this is only part of a larger story. Perhaps the most revealing statistic from our ‘Bitcoin and Ethereum Sentiment Study’ stemmed from the simplest question one could ask.
When queried about overall sentiment on the ‘state of bitcoin’ and how it compared to the ‘state of ethereum’, there was a stark contrast.
Respondents were absolutely ecstatic about ethereum, with less than 5% responding negatively.
In contrast, sentiment around bitcoin was largely split.
Study in contrasts
Some of the negativity toward bitcoin undoubtedly stemmed from the continued rise in daily transaction numbers and average block sizes, which reached their all-time highs in the first quarter amid record-breaking transaction fees and confirmation times.
Perhaps, however, there is a positive side to the increasing network use – the simple fact that all-time high transaction volumes and fees occurred at the same time, illustrating that the demand to use bitcoin did not falter amidst exponentially largely costs.
Another question found that many users now view bitcoin as less of a ‘digital currency’ (like its creator Satoshi Nakamoto seemingly described in the ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ white paper), and more of a ‘digital gold’ (seemingly used more for value storage and investment).
Perhaps as a result, there’s a growing belief that other cryptocurrencies can also be used for transactional and exchange purposes.
Contributing factors
Notably, as questions got more granular, this discrepancy in sentiments continued.
For example, the bitcoin mining network is now also seen as much more centralized than ethereum’s, despite the fact that certain ethereum mining pools currently account for larger percentages of its network’s hashing power when compared to bitcoin.
When it came to supporting projects, sentiment on ethereum also largely remained positive.
Despite the early stage of many ethereum dapps, participants were very positive on the current landscape of projects across the ecosystem.
Further, while seemingly initially created as a system aimed at disrupting traditional incumbents, most appear positive and excited about traditional financial and technology firms becoming involved in ethereum, even if focused on ‘permissioned’ forms of the network.
Ethereum’s future
Beyond gathering feedback and sentiment around the current ‘state of ethereum’, our Q1 study also had participants look ahead with their predictions on the future of the network.
The community is positive about ethereum’s impending transition to a ‘proof of stake’ consensus algorithm, and the effect it will bring to the overall decentralization of the network – with 93% confident it will be live by the end of 2018.
Indeed, when it comes to technical progress, expectations for ethereum are now exceeding bitcoin’s in certain areas. Respondents, for example, indicated that off-blockchain scaling solutions are more likely to take place on ethereum.
Overall, 57% think we’ll see Raiden (ethereum’s off-chain scaling technology) live in 2017 and 87% believe Raiden will be live by the end of 2018. By comparison, just 19% said they think bitcoin’s long-proposed Lightning Network would be live this year.
Also notable was the fact that more respondents thought that the Lightning Network would not be live until ‘2020 or later’.
As ethereum continues to grow, however, it remains to be seen whether it can keep its momentum – and optimism – amid an influx of users, projects and startups. Already, signs suggest there could be tensions here as sky-high expectations meet the reality of shaping a large, distributed network.
View CoinDesk Research‘s full Q1 2017 State of Blockchain for more analysis on the ethereum network and the full results of our bitcoin and ethereum sentiment survey. Also be sure to check out our new ethereum guides for an introduction to the technology and ecosystem.
Smiley image via Shutterstock