Below is a screenshot I took of EthGasStation<\/a> \u2014 an Ethereum transaction fee tracker \u2014 on Jul. 27, as Bitcoin shot over a dozen percent higher in a single 24-hour period.<\/p>\n At 130 Gwei \u2014 a measurement of the cost of Ethereum transactions \u2014 simple transfers of ETH cost over $1.00 while complex smart contract transactions cost upwards of dozens of dollars.<\/p>\n Although transaction fees have dropped since I took this screenshot, the issue of high transaction costs remain.<\/p>\n When you hear the term “network effect(s),”<\/a> most think it's an inherently positive thing.<\/p>\n Bitcoin's growth is predicated on network effects, as is that of Facebook, Youtube, and any other social media platform or monetary asset.<\/p>\n Yet according to Tushar Jain<\/a>, a managing partner of crypto venture and hedge fund Multicoin Capital<\/a>, Ethereum has reached a point where it has “negative” network effects. That's because with every new user, with every new application, the blockchain slows down and becomes more expensive.<\/p>\n “Ethereum 1.0 is now facing *negative* network effects. Every new user raises the transaction cost for other users,” Jain explained in a tweet published<\/a> Jul. 27.<\/p><\/blockquote>\n Ethereum 1.0 is now facing *negative* network effects. Every new user raises the transaction cost for other users.<\/p>\n Ethereum needs scaling solutions NOW or the negative network effects will drive many devs and users away.<\/p>\n — Tushar Jain (@TusharJain_) July 27, 2020<\/a><\/p><\/blockquote>\n![\"Ethereum](\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2020\/07\/EthereumTXFee.jpg\")
Ethereum's negative network effect<\/h2>\n
\n