Jill Gunter is no stranger to crypto – she has seen the market through its ups and downs, researched blockchain protocols, worked at multiple crypto startups and co-founded her own, and investing as a crypto VC at Slow Ventures . Gunter first started following the crypto space in 2011, when she worked in traditional finance as a derivatives trader at Goldman Sachs and when Bitcoin was the only major layer-one blockchain.
Since then, Gunter told MovieUpdates’s Chain Reaction podcast that she has witnessed three distinct stages of development within the industry that have led to this moment of heated competition between multiple established blockchains and even more new protocols entering the fray.
The first phase is what Gunter called the era of altcoins. Protocols such as Litecoin, Dogecoin and ZCash were born in this era, when developers tried to modify the Bitcoin protocol in specific ways, such as changing the block size to change the system’s throughput, she explained.
“What you came out with was a lot of blockchains and a lot of tokens that had many of the same properties as Bitcoin, but changed the feature set,” Gunter said.
The next stage of the development of new blockchains, according to Gunter, came with the creation of Ethereum in 2015. Ethereum brought a “sea change” in terms of what one could do with a blockchain by introducing the concept of programmability.
The modern era of layer-one blockchains, she continued, can be understood as a period when developers try to adapt the feature sets of programmable blockchains to address some of the problems with Ethereum that exist today. Developers are trying to reduce costs, increase usability and add privacy features to applications on the blockchain that the layer-one Ethereum chain itself does not have.
Ethereum’s high transaction fees and low throughput continued to plague the network with issues, frustrating users. Yuga Labs’ recent metaverse land sale made headlines last week as people trying to buy NFTs faced exorbitant gas costs and failed trades due to the popularity of the drop.
While alternative blockchains like Solana and Avalanche offer lower costs and can process transactions much faster than Ethereum, Gunter said these other chains haven’t “been fully tested that Ethereum has been” because they didn’t have to process as many users right away.
Plus, these newer chains all have “centralized something in some way,” Gunter continued.
“For the most part, these things have on their roadmap ways to continue decentralization over time, but again, we have yet to put those to the test. We also have yet to see the ways in which decentralization is really important for users in terms of the architecture of these things,” Gunter said.
These different blockchains increasingly have to compete to attract developers to their ecosystems. As the co-founder of privacy-focused layer-one blockchain Espresso Systems, Gunter knows firsthand how challenging it can be to get engineers to invest time developing projects in a specific chain when there is so much competition.
“Personally, I don’t think it’s good enough anymore to just wave around with a white paper that says, oh, we’re actually getting more scalable and more decentralized than anything else,” Gunter said. “Having what already exists. And I think neither is good enough without the other – I think you have to argue why your system is going to become the most popular and the most noisy over time.”
Admittedly, she added, all the layer-one projects out there “make the right sounds,” but have yet to be tested by users. Especially if crypto continues to experience a market decline, the winners and losers in the battle between layer-one blockchains could be separated faster than the industry expected.
The entire interview with Gunter can be heard in our podcast Chain Reaction. Subscribe to Chain Reaction on Apple, Spotify, or your alternative podcast platform of choice to keep us updated every week.