When it comes to different Layer 1s that support smart contracts, the most popular one is undoubtedly Ethereum. With nearly 216 billion dollars in market cap and 70 billion dollars in various DeFi protocols, the success of Ethereum has undoubtedly given way to many technical innovations that all cryptocurrencies use today.
Most other top cryptocurrencies use the Ethereum Virtual Machine as their foundation, meaning they are essentially the same network and code as Ethereum with minor changes. While this does speak to the massive popularity of Ethereum, popularity does not always imply comparative technology. The Ethereum network and its derivative chains have always been known as somewhat slow, often taking 15 to 30 seconds to process a transaction, and that transaction costing significant amounts of money in gas.
With the Ethereum network launching in 2015 and containing so much value, it is no surprise the tech has started to show its age as the Ethereum foundation must reach an extensive consensus. This is why newer networks can move quickly, since they can reach consensus faster, and improvements are more readily accepted.
The Internet Computer (IC) is one of the networks that has implemented the greatest number of positive changes to the Ethereum model. Rather than simply using the same code, the IC is an entirely brand new platform, made by developers conscious of the pain points on Ethereum and who have primed it for real-world adoption.
Regarding accessibility and use cases, the Internet Computer can mirror existing centralized services better than other blockchains. These improvements include speed, storage costs, gas fees, tokenomics, and more. Read on for a further dive into some categories where the Internet Computer outperforms the Ethereum Virtual Machine.
The average block time on Ethereum is between 12 and 14 seconds. This alone is already relatively slow, considering your credit card approves at a store in less than 3 seconds. Not only this, but there's a high likelihood that your transaction will not be included in the first block. This means that a transaction on Ethereum could take anywhere from a few minutes to a few hours to never confirming at all. This is worsened by the amount of data in your transaction, as large transactions can sometimes take even longer to include if you skimp on gas.
The Internet Computer solves this by scaling horizontally, meaning creating new nodes and subnets whenever they are in need. This means the IC can process up to 11,000 transactions per second, compared to Ethereum's 14 per second. Other blockchains claim high numbers, then fall flat when smart contracts are included, but the IC can process 11,000 smart contract updates per second. This means the IC is very scalable and improves on Ethereum's speeds by nearly 800x!
Gas fees on the Internet Computer are incredibly cheap, sometimes even free! "Gas" is what the user pays for in order to run computations on a blockchain. Much like you need to pay for gas to fuel a car, you need to pay for gas to fuel the network running your transaction. On the Ethereum network, the gas price depends on how busy the network is, which means you may pay anywhere from $6 to hundreds of dollars for complex transactions during busy hours! This simple problem means that the vast majority of users cannot use the Ethereum network simply because gas fees will consume their entire portfolio.
On the Internet Computer, the equivalent of gas is called cycles. It is incredibly cheap and a constant, fiat-based price for users. A large transaction typically costs, at most, a single cent. Additionally, some canisters (essentially smart contracts on the Internet Computer) even pay for your cycles when you interact with them; a model called the Reverse Gas Model. This means cycles are always cheap for the user when they have to pay for them, and sometimes completely free! This equates to an improvement of over 99.9% compared to the Ethereum network.
Applications need data to run. A computer that can't store data is basically a shiny toy, but a computer that costs millions of dollars a year to store data is expensive! Unfortunately, that is the reality on the Ethereum network. Storing data on the Ethereum network is incredibly costly and can cost 40 million dollars to store a single gigabyte of data. On the Internet Computer, this only costs $5 a year per gigabyte. A saving of, again, 99.999%! This means applications can use as much data as they need without worrying about going bankrupt for storage or resorting to centralized solutions.
One example of this being useful is with NFTs. Most existing blockchains, including Ethereum, store the NFT's image (i.e., your favorite monkey) on a centralized server, and the NFT on-chain simply points to that server. With the IC, pictures and video can be stored directly in canisters, on-chain, and accessed in a decentralized manner.
Though the Internet Computer certainly has many improvements over the Ethereum and Bitcoin networks, it does not seek to replace them. Instead, it aims to enhance the capabilities of the networks. By Q3 2022, the Internet Computer seeks to integrate with the Bitcoin network, allowing canisters and users to receive and send Bitcoin directly on the Bitcoin network without needing to manage private keys for networks outside of the IC. Eventually, similar integrations with Ethereum will also be built into the Internet Computer.
Conclusion and Thoughts
The Internet Computer is a powerful network using the best technology available. The technicals are complicated and cutting edge but lead to the massive improvements the IC has over other blockchains. The IC can outperform the Ethereum network in almost every metric, including storage costs, gas costs, and transaction speed. This is not to say the IC will replace other blockchains but grow as a tool to capitalize on other blockchains to make them function better than using them directly. Using the IC will take the best features of both the Ethereum and Bitcoin networks, enhance them, and make decentralized currency and programs available to all users.
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