Cryptocurrency investor and founder Jill Gunter on the increasingly fierce competition between blockchains – and what it takes to win – TechCrunch

Jill Gunter is no stranger to cryptocurrencies – she has seen the market through its ups and downs, conducting research on blockchain protocols, working on several cryptocurrency startups and co-founding her own, and investing as a crypto VC at Slow Ventures. Gunter started following the crypto space in 2011 when she worked in the world of traditional finance as a derivatives trader at Goldman Sachs and when Bitcoin was the only major tier one blockchain.

Since then, Gunter told TechCrunch’s Chain Reaction podcast, she has been able to witness three distinct phases of development within the industry that have led to this time of fierce competition between various established blockchains and even more new protocols entering the fray.

The first phase is what Gunter called the altcoin era. Protocols like Litecoin, Dogecoin and ZCash were born around this time, as developers looked to tweak the Bitcoin protocol in specific ways, such as changing the block size to change the system throughput, she explained.

“What you found was a lot of blockchains and a lot of tokens that had a lot of the same properties as Bitcoin but changed the feature set,” Gunter said.

The next phase of new blockchain development came with the creation of Ethereum in 2015, according to Gunter. Ethereum brought a “radical change” in terms of what one could do with a blockchain by introducing the concept of programmability.

The modern era of tier one blockchains, she continued, can be understood as a period of developers trying to tweak the feature sets of programmable blockchains to solve some of the problems with Ethereum that exist today. Developers are trying to reduce fees, increase usability, and add privacy features to applications on the blockchain that the Tier One Ethereum chain itself lacks.

Ethereum’s high transaction costs and low throughput continued to plague the network with problems, frustrating users. Yuga Labs’ recent metaverse land sale made headlines last week as people trying to buy NFTs were faced with exorbitant gas fees and failed transactions due to the slump in popularity.

While alternative blockchains like Solana and Avalanche offer lower costs and can process transactions much faster than Ethereum, Gunter said these other chains weren’t “fully tested like Ethereum” because they didn’t have to process as many users at once.

Furthermore, all of these newer networks “centralized something in some way,” Gunter continued.

“Most of the time these things have in their roadmap ways to continue to decentralize over time, but again, we have yet to see that put to the test. We also have yet to see how decentralization really matters to users in terms of the architecture of these things,” Gunter said.

These different blockchains are increasingly having to compete to attract developers to their ecosystems. As the co-founder of Espresso Systems, a privacy-focused tier one blockchain, Gunter knows firsthand how challenging it can be to get engineers to invest time in developing projects in a specific chain when there is so much competition.

“Personally, I don’t think it’s good enough to just nod to a white paper that says, oh, we’re actually going to be more scalable and more decentralized than anything else,” Gunter said. “I think you need to have resources that are really different from what already exists. And I think neither is good enough without the other – I think you have to argue why your system will be the most popular and the loudest going forward.”

It’s true, she added, that all layer-one designs are “making the right noises,” but they still need to be tested by users. Especially if cryptocurrency continues to experience a market downturn, the winners and losers in the struggle between layer one blockchains could be separated more quickly than the industry expected.

You can listen to the full interview with Gunter on our podcast, Chain Reaction. Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to follow us every week.

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