Without these three crucial “transitions,” Ethereum “fails,” according to Vitalik Buterin

The Ethereum co-founder claims that layer-2 scaling, wallet security, and privacy-preserving features are all essential to ensuring Ethereum’s future.

Layer-2 scaling, wallet security, and privacy-preserving features, according to Ethereum co-founder Vitalik Buterin, are three crucial technical “transitions” that must occur practically simultaneously in order for Ethereum to succeed.

Buterin explained that the Ethereum blockchain “fails” outright in the absence of adequate scaling infrastructure to lower transaction costs in a post on his personal blog on June 9.

“Ethereum fails because each transaction costs $3.75 ($82.48 if we have another bull run), and every product aiming for the mass market inevitably forgets about the chain and adopts centralized workarounds for everything,” he claimed.

Buterin claims that the issue of wallet security in relation to smart contract wallets is another area of failure.

According to him, switching to smart contract wallets has made it more difficult for consumers to get the same address across Ethereum and different layer-2s.

Buterin stated that both layer-2s that are equal to the Ethereum Virtual Machine (EVM) and those that are not:

“Even when hash equivalence is possible, the potential for wallet ownership to change due to key changes creates other illogical consequences.”

To effectively shift into an on-chain world with zero-knowledge rollups, Buterin said that wallets would need to secure data in addition to cryptographic assets:

“In a ZK world, however, this is no longer true: the wallet is holding your data in addition to protecting authentication credentials.”

For the third and final shift, privacy, new identification, reputation, and social recovery mechanisms will be required.

Without the third, he claimed, “Ethereum fails because making all transactions (and POAPs, etc.) publicly visible for anyone to see is far too high a privacy sacrifice for many users, and everyone moves onto centralised solutions that at least somewhat hide your data.”

The co-founder of Ethereum proposed using stealth addresses to alleviate this problem.

Buterin claimed that due to the “intense coordination” needed to complete all three, it will be “challenging” to do so.

He acknowledged that all three of the changes “weaken” the “one user — one address” approach, which could complicate how transactions are carried out.

“How do you get the information on how to pay someone if you want to?”

How do users make key modifications and engage in social recovery if they have numerous assets kept across numerous chains? he continued.

In his final remarks, Buterin emphasized the need of creating infrastructure that ultimately enhances user experience:

“Despite the difficulties, scaling, wallet security, and normal users’ privacy are essential for Ethereum’s future. Technical viability is important, but actual accessibility for common consumers is as important. To meet this challenge, we must rise.