Ethereum and Visa have collaborated consistently recently. The centralized and decentralized technologies are similar in numerous ways, for which Visa saw the opportunity to introduce crypto payment features for crypto users. From 2020, Visa aims to contribute to developing and adopting digital assets into the real world by partnering with Ethereum-based startups or bringing innovation.
Ethereum, the second prominent cryptocurrency on the market, became famous primarily due to smart contract functions and the blockchain’s capacity to leverage tools for developers. Ethereum’s community is the strongest and maintains the ecosystem with the goal of allowing ETH to survive the competition to become as big as Bitcoin.
On the other hand, Visa is one of the most important companies in the world, operating millions of transactions worldwide through a centralized system. However, the business wants to expand its opportunities, so it approached crypto. Besides adopting it as a payment option, Visa intends to improve the Ethereum price today. Here’s how.
Visa’s proposal to Ethereum
Recently, the credit company suggested a method through which the ether community would collaborate to develop automatic payment from their self-custodial wallets to eliminate the need for banking institutions to get involved in the process.
The plan would be backed by Visa. For it to work, smart contracts will be transformed into a software wallet through executing commands. This would make the entire transaction process more efficient, therefore lowering gas fees.
This is not the first time Visa wants to contribute to developing the crypto market. The company’s teams and ETH developers continuously work on increasing the blockchain’s capacity to handle significant transaction volumes while ensuring security and interoperability.
Visa was the first centralized authority to consider crypto important
It took some time for cryptocurrency to be considered reliable by communities, but Visa undoubtedly contributed to users’ trust in this new technology. When Bitcoin was released in 2009, Visa launched a crypto-based card in 2015, taking the competition by surprise. Now, massive companies like Mastercard, PayPal and Block are taking the same road.
Still, it’s expected that Visa will be the first to bring changes regarding crypto adoption, as it continues working with the community’s developers instead of marching toward governments. Indeed, official authorities lack perspective on providing a thorough legal framework, hindering the worldwide adoption process.
Will Visa’s efforts really help Ethereum?
While Visa is making considerable efforts to make Ethereum more approachable to regular users and businesses, it’s unsure if these plans will bring it to the mainstream due to the lack of trust from legal authorities like the SEC.
Until now, the SEC has mainly targeted ETFs and other new technologies but has admitted to being against cryptocurrency and digital exchanges whose security and certainty are not impressing the government body. Therefore, it delays numerous decisions on putting crypto within a legal framework that allows users to use it for any kind of transaction legally.
There’s also the competition against Bitcoin that might challenge Ethereum developers and users. Bitcoin is the first and most known digital asset, so it has received more attention and is developing to be adopted globally. So, more users choose Bitcoin first in their portfolio, while
Ethereum and the other altcoins always come second.
Still, what Visa does is simply a business collaboration, which will also get them at least a competitive advantage in the transactional sector. However, ETH will benefit from more media coverage and adaptiveness to new demands, increasing its popularity and likelihood to be improved.
What are some of Ethereum’s challenges?
Before becoming the world’s best cryptocurrency and blockchain, Ethereum may need to solve some of its issues. The asset’s ecosystem was already put to work in the Merge, the update that made the switch from Pow to PoS, which consumed much mining energy.
Now that this is solved, other problems are in need of improvement, such as the following:
- Ethereum still has issues with scalability despite a continuous approach to the problem. The network increased considerably since ETH had a massive user increase at some point, which led to congestion. Therefore, Ethereum could only process a small number of transactions per second, which was overtaken even by Visa and other small cryptocurrencies. At the same time, this put Eth in danger of centralization, with many other negative implications;
- Ethereum’s increasing transaction costs are also a challenge because no matter what developers do, it seems like these prices are surging again after everything’s in regular targets. That happens due to numerous reasons, but what’s worrying is that these surges in prices are causing users and miners to stop using ETH;
- Privacy is reinforced on the blockchain, but despite layers on the platform, it’s still difficult to ensure everyone’s safety when the blockchain is transparent, and interactions and transactions are visible to the public;
Overall, the main problem with Ethereum is that while it focuses on transactions as a digital currency, its smart contract function leads it into a different market. It sounds like a multi-tool, which is why it’s difficult for developers, miners and users to go in a similar direction regarding promotion and usage. That’s why other blockchains are great competitors to Ethereum, even though they’re not even close to its popularity. Solana, for example, has a proof-of-history mechanism and outshines Ethereum’s scalability and TPS.
There’s also Near, a Layer-1 blockchain with innovative sharding technology through which the network never gets congested. Finally, Polkadot has a different infrastructure from regular blockchains, allowing multiple parallel blockchains to connect and spread transactions across them for maximum scalability.
All in all, Ethereum is a great tool for development and an excellent cryptocurrency. Still, it has to push a bit more to exceed Bitcoin and become the most significant asset in history.
Final considerations
Ethereum and Visa are collaborating again to make the blockchain lower transactional gas fees. The two institutions have been exchanging efforts for a while now, with Visa’s team approaching ETH developers for knowledge. The final goal is to make ETH accessible to the public and improve it to develop the crypto sector.
