Vitalik Buterin says Ethereum needs 3 crucial transitions to avoid failure.

The co-founder of Ethereum, Vitalik Buterin, believes that the success of Ethereum depends on three major technical “transitions” that need to happen almost simultaneously. These transitions are layer-2 scaling, wallet security, and privacy-preserving features.

Buterin explained in a post on his personal blog on June 9th that the Ethereum blockchain will outright “fail” without sufficient scaling infrastructure to make transactions cheap. According to him, without this scaling infrastructure, 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.

The Three Transitions:

— vitalik.eth (@VitalikButerin) June 9, 2023

Buterin further explained that smart contract wallets are another point of failure, as moving to smart contract wallets has caused some issues due to complexities from the user experience side of things when users take control of multiple addresses at once.

Aside from wallets securing crypto assets, Buterin explained that wallets would need to secure data to truly transition into an on-chain world with zero-knowledge rollups. He suggested that stealth addresses could be implemented to resolve this issue.

The last of Buterin’s three transitions is privacy, which will need to come in the form of improved identity, reputation, and social recovery systems. According to him, without privacy, Ethereum fails because having all transactions and POAPs available publicly for literally anyone to see is far too high a privacy sacrifice for many users.

Buterin said that achieving all three transitions will be “challenging” because of the “intense coordination” involved between them. He admitted that each of the three transitions “weakens” the “one user — one address” model, which, in turn, may complicate the way transactions are executed.

Buterin concluded by stressing the need to build infrastructure that ultimately improves user experience, as achieving scalability, wallet security, and privacy for regular users is crucial for Ethereum’s future.