Jill Gunter seems to be no stranger to the cryptocurrency business, with experience working at many crypto startups, co-founding her own, and investing as a crypto VC at Slow Ventures. Gunter first became fascinated with cryptocurrency in 2011 while serving as a derivatives trader at Goldman Sachs and when Bitcoin was the only significant layer-one blockchain.
Gunter informed TechCrunch’s Chain Reaction podcast that she’d seen three separate periods of development in the sector since then, all of which have led to the current state of heated competition between numerous known blockchains and even more new protocols joining the mix.
As Gunter put it, the emergence of altcoins is the first phase. Developers wanted to adjust the Bitcoin protocol in specific ways, such as changing the block size to alter the system’s throughput, leading directly to protocols like Litecoin, Dogecoin, and ZCash.
“What you received was a lot of blockchains and a lot of tokens that had a lot of almost the same characteristics as Bitcoin, but with different data sets,” Gunter remarked.
According to Gunter, the launch of Ethereum in 2015 brought in the next era of blockchain development. By providing an overview of programmability, Ethereum fundamentally changed what could be done with a blockchain.
She explained that the modern era of layer-one blockchains could be viewed as a period in which developers attempt to alter the features extracted from programmable blockchains to solve some of the current troubles with Ethereum. Developers are looking to reduce fees and configuration issues and add privacy controls to blockchain apps that the layer-one Ethereum network lacks.
The network’s high transaction prices and low throughput have caused more significant problems, increasing customers’ frustration. People seeking to obtain NFTs were hit with high gas fees and unsuccessful transactions due to the popularity of Yuga Labs’ recent metaverse property sale, which made news last week.
Alternative blockchains like Solana and Avalanche have lower transaction costs. They can process transactions much quicker than Ethereum, but Gunter believes they haven’t been “completely put to the test” because they haven’t had to handle as many customers at once.
Moreover, Gunter stated that these newer chains have “centralized something somehow.”
“For the most part, these entities have methods to decentralize overtime on their roadmaps, but we have yet to see those put to the test. Regarding the design of these things, we have to see how much decentralization applies to users, “Gunter clarified.
These various blockchains are aggressively competing for developers to adopt their ecosystems. As the co-founder of Espresso Systems, a privacy-focused layer-one blockchain, Gunter realizes how difficult it can be to encourage programmers to devote time to developing projects on a particular chain when there is so much competition.
“I don’t think it’s good enough anymore to throw around a white paper that says, well, we’re heading to be more flexible and decentralized than anything else,” Gunter added. “I believe you need characteristics that are clearly distinct from what is already accessible. And I believe that neither is sufficient without the other; I believe you must explain why your system will be the most popular and the most sound in the coming.”
She acknowledged that all the layer-one projects out there are “making the right noises,” but they have to be tested by individuals. The champions and losers in the struggle between layer-one blockchains may be distinguished faster than the industry had predicted, especially if crypto suffers a market collapse.