Vitalik: Ethereum Solved Crypto's Impossible Problem

Running a coffee shop or cafe and a successful coffee shop or cafe means that there are three key factors you need to keep in mind at all times: 1) price/affordable price per quality bean; 2) good staffing to accommodate the busy morning rush (and make sure no one waits), and; 3) good customer service. So far, so good… and who wouldn't want all three? But the reality of the coffee business (like most businesses) is complex: you cannot do all three at once.

The way that you achieve all three is through an added expense: more people means higher costs; more inexpensive/high-quality beans mean losing quality or having compromised flavor in the final product. More expensive, higher-quality coffee means having a long wait in line. You either pick two of these three elements: the coffee/breakfast rush, the customer service side, or the price as low as possible and give up the third. At least, that's how it's been historically.

When you compare this scenario with Ethereum and the comments made by Buterin on January 3 of this year, you will notice a commonality. Buterin believes that we can all three items at once with Ethereum. If what Buterin has proposed is true, then the world has entered a new age of bridging many of the existing businesses/industries with one another via blockchain technology, thus changing the way we work.

The Problem That's Haunted Crypto For a Decade

Every blockchain engineer has faced an impossible choice for ten years. The blockchain trilemma is the technical challenge of achieving decentralization, security, and scalability.

Translate that into human stakes.

Decentralization implies no one controls your money. Your transactions are uncensorable. Your account can't be frozen because a CEO woke up mad or a law was passed. Crypto is all about decentralization.

Security prevents hackers from stealing money. Bad actors can't control networks. With arithmetic that would take thousands of years to break, your digital wallet keeps your life savings safe.

Scalability means the network can support millions of users. Transactions take seconds but not hours. You pay pennies instead of $50 to move your money.

The cruel fact of blockchain since Bitcoin is that most public blockchain networks struggle to maximize all three pillars since improving one frequently means sacrificing the others.

Due to the emphasis on decentralization and security, Bitcoin can only process approximately seven transactions per second (TPS), compared to the thousands of transactions processed by Visa during peak traffic times at a cost of $40 for every $100 transferred using Bitcoin.

Solana, on the other hand, opted for speed and scalability, resulting in an extremely high volume of fast transactions being completed. However, due to a lack of confidence in Solana's ability to create a decentralized network because validator nodes must require specialized equipment with prices from $20K and up, there have been several network interruptions with Solana.

For many years the blockchain industry viewed these attributes of Bitcoin and Solana as fixed in stone, never to be changed; however, that view is about to shift dramatically.

What Changed On January 3rd

Vitalik Buterin believes transmission errors can be tackled through hands-on experimentation. By using existing networks rather than on-paper solutions, Vitalik believes we are currently developing ways to eliminate these errors. To support this conclusion, Vitalik references an astonishingly complex discovery, PeerDAS, as an example of new technology that has provided a means for Ethereum to operate on a larger scale than previously possible. PeerDAS provides a method of "sampling" data within this library of connected, authenticated nodes.

In the future, there will be enough nodes connected to allow all of them to sample from various sources and then put those pieces back together and determine if a book really is valid. The second revolutionary finding supporting this conclusion is the continued implementation of the Ethereum protocol. At present, Ethereum can manage very large datasets without needing validators to download and keep copies of the datasets. To further bolster this theory, PeerDAS has already been The second significant recent innovation for Ethereum's mainnet is zero-knowledge Ethereum Virtual Machines (zkEVMs) that enable transactions to be verified on the network, without requiring every node on the network to recalculate the entire transaction.

For example, imagine you are a teacher who needs to verify the answers of 30 students who took your mathematics exam. Generally speaking, you would carefully check each answer by hand, which would typically take hours. Now, imagine if your students could automatically verify that their answer is correct through a mathematical method without you doing so and could do it in seconds! That would obviously save an incredible amount of time.

In the words of Vitalik Buterin, zkEVMs have reached the "Alpha Phase" of their development, meaning they are operating at "production quality", but "there are still some issues with ensuring the safety of the technology". The technology is performing quite well and quickly, it just needs to be made foolproof.

Why This Matters To You (Even If You Don't Own Crypto)

The examples above are just two real-live situations calling out for improvements in efficiency and costs for individuals who want money or services made available instantly with less overhead than current solutions.

Remember Sarah; she is a Graphic Designer based out of the Philippines working solely on freelance contracts through overseas Clients; primarily Europeans or Americans. The only way she could accept payment from these Clients was via Wire Transfer or PayPal; giving her anywhere from 1-3% in fees to receive payment from her Clients.

These two solutions are time-consuming and can take anywhere between 1-7 days for payment processing to complete depending on the relationship between the sending and receiving banks and countries.

With Ethereum's ability to create a convenient solution to the above two examples, Sarah has options: She can accept payment through Decentralized Applications (Dapps) immediately. Decentralization allows for person-to-person transactions with minimal fees (usually $0.01 to $0.10) and instant payment into her Wallet (there is no waiting period).

Marcus, a Small Business Owner in Kenya, struggles to save due to rampant inflation (currently 8% annually) eroding his currency. Currently, Marcus could deposit his savings into a Local Bank account that provides 2% interest, but because of inflation, he would be decreasing the value of his savings.

In addition to not participating in Global Trade; Marcus would also have to hold a Stablecoin within a Decentralized Protocol to gain access to similar financial products as Individuals in Wealthier Nations. By utilizing a decentralized protocol built on Ethereum, Marcus's savings can earn interest instead of being eroded due to bank fees and inflation.

The Rollout Timeline (And Why It's Not Instant)

When evaluating the expectations we have for Vitalik, he has declared the trilemma "solved" by establishing what "will" mean with architectural development and code execution - surrounding a four year plan at the start of all major increases in gas restrictions that are not dependent on ZKEVM technology until 2026.

Think of it this way: The airplane design has been completed and a prototype has now been flown successfully; yet there were not booked flights yet available commercially next month.

We're not going to book flights until enough time to conduct pilot training, perform safety certification for the capital and build out required infrastructure, to safely accommodate the increase in throughput.

Because of the necessity of safely enabling a significant increase in throughput through gas repricing, state organization improvements and execution payload transfer to the blob upon completion between 2026 and 2028, the majority of the validation of zkEVM for the block periods expected would be achieved around 2027 - 2030, through Ethereum.

In terms of throughput capability achieved in 2026; to have 12k transactions processed through the Ethereum Network versus Bitcoin's 7 transactions or just a few thousand through VISA alone, to that 20