Ethereum's tenth anniversary is approaching: ETH has already emerged victorious.

Author: Paul Brody, Head of Blockchain at Ernst & Young, Source: Coindesk, Translated by: Shaw, Golden Finance

Summary

• Ethereum is about to celebrate its tenth anniversary. Despite ongoing debates about its future, it is widely believed to have firmly established its dominance in the Blockchain platform.
• The dominance of technology platforms like Ethereum often follows a winner-takes-all model, driven by zero marginal costs and network effects.
• Despite the existence of other blockchain networks, Ethereum's transition to a proof-of-stake mechanism and the success of its Layer 2 ecosystem have solidified its leading position in the market.

At the end of this month (the end of July), the Ethereum public blockchain will celebrate its tenth anniversary. In the cryptocurrency space, people have spent too much time discussing whether Ethereum will succeed, whether it will become the foundation for the next stage of global business and finance. All these speculations are in vain. Ethereum has already triumphed. It's just that the losers don't know it yet.

You may scoff at my opinion because I am a notorious ETH "bull" and have been for over a decade. But please let me finish what I have to say.

P.S.: Yes, really, it's been over ten years. Vitalik Buterin got me started on researching Ethereum, and when I was an executive at IBM, I showcased IBM's first attempt at Blockchain technology at the Consumer Electronics Show (CES) in January 2015. That's another story, but I've been involved from the very beginning.

Blockchain is, first and foremost, a technology platform. When we talk about them, it seems as if they are a financial system, but their performance and development resemble that of a technology platform. If we look back at the history of technology platforms, we can see some clear patterns emerging, and Ethereum appears to be following these patterns.

First of all, this is a winner-takes-all industry. IBM holds 100% of the mainframe software market. Windows occupies 90% of the personal computer market. The Android system covers about 90% of smartphones. TCP/IP accounts for approximately 99.9% of network traffic.

This model keeps repeating itself because the computing platform has two factors that favor a winner-takes-all business model. First, the marginal cost of adding new users is zero. Each new user incurs almost no cost, allowing the network to increase new users for free.

Secondly, the network effect means that the more users there are, the higher the value of the network, making it extremely difficult (but not impossible) for laggards to catch up with the leaders.

In the early stages of platform development, winners often come and go quickly. The network effects are not yet strong enough to be a key factor, and superior products can eliminate previous leaders. We have seen this happen early on in the personal computer and mobile device fields, where early leaders (Apple II, Commodore 64, and later Nokia and BlackBerry smartphones) were replaced by remarkable new platforms.

However, in all these cases, the platform "type" itself is very new (less than ten years), and the adoption rate is also relatively low (less than 10% of the public). As we approach the tenth anniversary of Ethereum's official establishment, we have surpassed both of these metrics. Many reports indicate that over 20% of the US population owns cryptocurrency, and the Blockchain platform has been around for more than a decade.

From a technical perspective, there are indeed better Blockchains than Ethereum. A fundamental lesson from global standards is that the best technology often does not prevail. From videotapes to DVDs to mobile computing, platforms gain momentum because they reach a "good enough" level for certain specific use cases (such as payments or NFTs). Many of the most successful platforms never truly solved their core issues, and they are often force-fitted into use cases that were not originally intended.

For example: The internet was never designed for voice and video, nor has it ever truly solved the issue of quality of service management. But it's good enough, and each of us has it, so this is how we make phone calls today.

So, if Ethereum really wins, you might ask, why are there still so many thriving Blockchain ecosystems? I think there are two answers.

First of all, the leading advantages in large networks and technology fields do not come overnight. They take years to fully manifest, and in intense competition, it is often difficult to see who is in the lead.

With Ethereum's transition to Proof of Stake ( PoS ) and the establishment of the Layer 2 ecosystem, the Ethereum network has clearly defeated its biggest competitors and is steadily developing on its already dominant position. The second-ranking participants may continue to change, but it has almost become impossible to reverse Ethereum's dominance today.

Ethereum has dominated the smart contract ecosystem for a long time. With the launch of other public chains, Ethereum's share in key indicators, such as the decentralized finance (DeFi) ecosystem, has significantly decreased, dropping to a low of around 50% in 2023. Since then, it has stabilized and started to rise again, thanks to the success of the Layer 2 ecosystem. No other single ecosystem holds more than 10% of the total market share.

This pattern is not uncommon. In 1984, Microsoft Windows became the largest desktop computing platform after intense competition in a fiercely contested market. At that time, it still faced fierce competition from companies like Commodore, Atari, and Apple. NeXT, Commodore, Atari, and Apple II continued to sell into the 1990s. In the first two years after the launch of the iPhone, BlackBerry's sales were actually still on the rise. Only the Mac survived in the long-term personal computer competition.

In the mainframe business sector, the path to exit is longer. After IBM launched the System/360 in 1964, it dominated the mainframe business. Unisys, the last global competitor of IBM formed by the merger of Burroughs and Sperry (known for Univac), manufactured its last proprietary hardware mainframe in 2015.

Secondly, the structure of the blockchain ecosystem itself will further extend the "lifespan" of networks that have failed to develop. Most of these are operated by foundations rather than enterprises. Therefore, there are no shareholders demanding a return on capital. As a result, those unsuccessful chains do not actually face exit pressure. It is expected that for the foreseeable future, they will continue to release small updates and publish a large amount of Ethereum-related content on X.

If there is one final lesson to be learned from the world of technical standards, it is this: once a position is established, it is extremely difficult and rare for leaders to lose their lead. Since 1984, Windows has been the winner in desktop systems. Since 1964, IBM has been the winner in data centers. I bet that 50 years from now, Ethereum will still be the world's leading blockchain ecosystem.