Note: all price data taken on the 23rd of December 2021.
What’s the biggest issue in crypto right now?
I’ll give you a clue, it’s been crypto’s biggest issue for almost five years now.
Can you guess?
Or to be more precise, excessive fees caused by network congestion.
This issue first reared its head back in the ICO boom of summer 2017. Then it kicked into gear when the first ever NFT game, CryptoKitties, went viral towards the end of that year.
Back in the CryptoKitties days, people were outraged at paying $5 in Ethereum gas fees.
Ha. Those are rookie numbers!
In November this year, the average Ethereum transaction fee hit $63.
And that’s just the basic transaction fee.
If you wanted to play around with DeFi or NFTs, or swap some tokens on a Decentralised Exchange (DEX), you were looking at anywhere from $100-$500 in fees.
(If DeFi and NFTs are new to you, check out my explainers:
Or just read my everything you need to know about crypto piece, which covers everything.)
If you told those same people raging at $5 Ethereum fees back in 2017 that they’d be paying $500 Ethereum fees in 2021 it would blow their minds.
But that’s the state of play we have today. And everyone just accepts it.
Ethereum is still the undisputed king of smart contracts, DeFi, NFTs and every other crypto creation (except “store of value” which is Bitcoin’s domain).
And whenever a new crypto comes along and starts getting popular… we inevitably find its fees start spiking, too.
I wrote about this last month in my Fantom review:
Fantom currently has extremely low fees and prides itself on having low fees. But like most cryptos, once its usage goes up, so do its fees.
Last month I saw posts complaining about ~$4 transaction fees on Fantom.
The main reason people move away from Ethereum is crazy transaction fees.
So if you want to replace, or even just compete, with Ethereum you need to get this issue sorted… and it looks like Fantom hasn’t managed it yet.
And Fantom isn’t the only one.
If you’ve been following crypto trends, you’ll know Avalanche has gained massive popularity and massive DeFi adoption over the last few months.
However, once its network got congested, its fees shot up too. In many cases to over $10.
So Avalanche proved itself to be no better than Ethereum. And its price took a tumble.
The same thing looks like it could happen with Fantom if it ever gets super popular.
But won’t Ethereum 2.0 solve the fees problem?
Again, from my Fantom review:
The official line on Ethereum now seems to be “use layer-2”. Because even when Ethereum 2.0 launches, its layer-1 gas fees will still be prohibitively expensive.
This is an inelegant solution.
If you’re going to bother porting your Ethereum over to a layer-2 platform, you might as well just trade it for a different layer-1 altogether.
Maybe it would be different if there was just one universal layer-2 solution. But there isn’t. There are tons of different Ethereum layer-2s all competing with each other.
It’s really no different to all the layer-1s that are competing with each other.
And in some cases, it might actually be easier/cheaper to move to a different layer-1 than to an Ethereum layer-2 solution.
So I can see how other layer-1s could stay relevant.
But at the same time, that kind of renders most of these other layer-1 hypecoins pointless.
Neither moving to one of the many layer-2s nor moving off Ethereum to a different layer-1 altogether is a great option.
I kind of think, as a user, you might as well stick within Ethereum and use its layer-2s and benefit from its massive network effect, decentralisation and security.
I guess you could say Solana is actually a step above the rest in terms of speed. But it’s mainly owned by insiders and arguably sacrifices decentralisation.
That’s why I keep coming back to Radix and IOTA.
Why do I keep coming back to Radix and IOTA?
Well Radix promises to have unlimited scalability (if you read my Radix review, you’ll know an earlier version already topped 1.4 million transactions per second) which will keep the congestion and thus the fees super low.
And IOTA… well IOTA goes one better.
IOTA doesn’t have transaction fees at all.
So instead of paying $500 in transaction fees to trade tokens on Ethereum, you could pay $0 to trade them on IOTA instead.
When IOTA came up with its fee-free structure in 2015, the idea wasn’t even related to DeFi. DeFi wasn’t even a thing.
IOTA was originally aiming to the de facto crypto of machine-to-machine transactions. Also known as the Internet of Things, or IoT. Hence, IOTA.
It still is.
But it’s also aiming to be a heck of a lot more now. Which we’ll get to in a second.
But to get back to why IOTA is feeless…
IOTA’s creators realised that the IoT won’t work if transactions aren’t free.
Devices need to be able to send constant microtransactions for the IoT to work.
Even a $0.00001 fee is going to mess up a microtransaction for $0.000001 or less.
In order for IOTA to work without fees, it couldn’t use a traditional blockchain. Instead it is built on a directed acyclic graph (DAG) called the Tangle.
Its DAG structure means it doesn’t need to pay miners to secure the network. It secures itself.
So without miners, there are no fees… and very little energy usage. Both of which are essential for machine-to-machine microtransactions.
And as IOTA was building all of this out, Ethereum’s DeFi and NFT applications took off like a rocket ship. Along with its fees.
IOTA realised DeFi was never going to reach its potential with such a fee structure and decided to make its own smart contract network, built on top of IOTA called Assembly.
So you would have IOTA for the free base layer, mainly aimed at IoT uses.
Then Assembly, IOTA’s permissionless smart contract network, would run on top.
And Assembly would be able to do everything Ethereum could do… but with the option of zero-fee transactions and smart contracts.
The incredible thing is, Assembly was only announced this December.
And the only way to get Assembly tokens (ASMB) is by staking IOTA.
And Staking goes live in two days’ time (assuming you’re reading this on Boxing Day 2021), on the 28th of December.
So the timing for this IOTA review couldn’t be more perfect.
That’s honestly not something I planned. It’s just worked out that way.
Once Assembly launches properly (2022), I have a feeling people will quickly realise they didn’t want a faster horse. They wanted IOTA all along.
What does that mean?
There’s a famous (likely fictional) quote from Henry Ford, of the Ford Motor Company:
“If I had asked my customers what they wanted they would have said a faster horse.”
Right now, people in crypto are looking for a faster horse.
The top layer ones and layer twos like Avalanche, Binance Coin, Cardano, Fantom, Algorand, Polkadot, Solana, Tezos, Polygon, Loopring… you name it. They’re just different versions of the same thing.
IOTA is different. It can do anything they can do – and in most cases do it a lot better – for free.
It’s not just a faster horse.
It’s a Tesla.
Now let’s get on with the ridiculously well-timed review.
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