Do you remember the “Silicon Valley Tech Bubble”? In the early to mid-2000s, the San Francisco Bay Area produced some of the most famous and successful tech companies the world has ever seen. Facebook, Google, Salesforce, Twitter, Tesla, Lyft – the list itself could take up half of this article. From the tangible energy to the network potential, one thing was certain: San Francisco was the right place.
For many, today’s San Francisco has lost its charm. The cost of living continues to rise across the city. The rest of the residents are tinkering with money to afford the monstrously high prices and are constantly rummaging around Zillow to see where the grass is greener. Suffice it to say that San Francisco is no longer viable for the working class and no longer suitable, let alone ideal, for many new and existing businesses. Though we gave us early tech platforms, the crowded, overpriced locale clings to its reputation and the memory of what it once offered.
This is not meant to beat up the city of San Francisco, but rather to highlight the allure of what will become San Francisco 2.0: Austin, Texas. The cheaper, more elegant city of Austin is home to a large number of San Francisco’s best businesses and smartest people. Sound familiar? The blockchain community is in the midst of a similar change.
If you’re a developer, Ethereum was your San Francisco – you had to build there. Ethereum hosts many of the most notable decentralized apps available today and really outlined the blueprint for smart contract development. Today’s Ethereum looks very different.
Much like the city of San Francisco, Ethereum is getting way too crowded and way too expensive to sustain its population. The limited scalability forces users to consider alternative options to bypass excessive gas prices and avoid congestion on the network. To keep the analogy, developers are looking for their Austin, Texas.
In the blockchain ecosystem, the Austin equivalent can be seen in similarly attractive chains like Solana, Binance Smart Chain, or Polkadot, to name a few. The rise of non-fungible tokens has even pushed newer chains like Flow to the fore as an alternative option.
New chain who dis?
Make no mistake, although NFTs are becoming increasingly popular, decentralized funding remains at the heart of the crypto ecosystem. The ongoing rise of DeFi brought to light two critical concepts, among other things:
- Decentralized finance will (most likely) attract the most widespread institutional capital.
- Ethereum is no longer equipped to scale the decentralized economy.
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Because of this, alternative chains to Ethereum are getting more attention than ever. We have seen that Polkadot, Moonbeam, Polygon, Binance Smart Chain and Solana not only challenge Ethereum, but also win over developers.
It may be possible for developers to simply test these alternative chains instead of abandoning Ethereum entirely. Perhaps a developer didn’t give up their monthly San Francisco apartment for $ 3,500, but they sublet it while renting an Airbnb in Austin.
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Of course, the list doesn’t end there. A variety of other chains are gaining ground against Ethereum. Austin isn’t the only hot target either; Miami, Denver and Toronto each have their arms open for transplants in the Bay Area.
Long term effects
As more and more developers flock to new chains in search of a break from high gas prices, it is worth questioning whether this is the new normal phase or just an experimental phase.
Right now, it is difficult to predict whether free agent developers will move to new chains to temporarily lower gas prices, or whether they will consider these chains as their new long-term homes. One thing that we can say with absolute certainty is that alternative chains are threatening the development monopoly that Ethereum has held for so long.
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One of the most telling factors is the Ethereum 2.0 reveal. The updated solution promises to increase the efficiency and scalability of the Ethereum network and alleviate the blockchain’s most alarming weaknesses today.
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At the same time, San Francisco recorded the largest drop in rents in the country in recent months. Earlier this year, the cost fell 23%. San Francisco itself is trying to seduce people with its own “2.0” release.
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One question now haunts both Ethereum and San Francisco: will it be enough?
Although the number of developers on Ethereum is a little more difficult to determine, the number of newcomers to San Francisco has already dropped 21%. If this is any indication, there is a risk that Ethereum will permanently lose its clientele to alternative chains if it does not address its problem areas in the near future.
Ethereum and San Francisco have both served as the linchpin for development in their respective ecosystems. Your blueprints are indeed the foundation upon which these new and exciting alternatives are built and modified.
While the blockchain community is reshuffling and new tenants are unpacking boxes, the question arises: which blockchain do you live in? Hopefully one that offers less network traffic, lower gas charges, and an influx of newcomers. If not, it may be time to consider moving.
This article does not contain any investment recommendations or recommendations. Every step of investing and trading involves risk, and readers should do their own research in making their decision.
The views, thoughts, and opinions expressed here are the sole rights of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Alex Wearn is the co-founder and CEO of IDEX, a cryptocurrency exchange focused on performance and security. He has spent his career in software development, including at a marketing analytics startup acquired by IBM and as an analytics project manager for Adobe. Before IDEX, he headed product management for capacity planning at Amazon Logistics. He has been working for crypto startups since 2014 and switched to full-time when IDEX launched in 2018.