According to recent metrics, Ethereum’s hash rate is down over 42% from its all-time high in August of 2018. The leading cryptocurrency platform is also down 85% from its peak in January of 2018.
Generally speaking, a network’s hash rate is a useful metric for assessing the health of a proof-of-work blockchain. It indicates how easy it is for a hacker to launch a 51% attack. By this standard, however, Ethereum seems especially vulnerable.
Ethereum’s Network Security Is Getting Weaker
Right now, Ethereum is still down 42% from its all-time high rate which it achieved in August of 2018. For comparison, Bitcoin also experienced a significant hash rate spike that summer which was an all-time high then. However, unlike Ethereum, it has since continued to grow and now boasts a hash rate which is 22% higher than that summer in 2018.
As it stands now, a hacker could shut down the Ethereum network with a 51% attack for an hour with just over $142,000. This is, of course, extremely unlikely but it points to an underlying problem Ethereum is facing: its network is simply not getting stronger. Of course, this isn’t to say that Ethereum has not been rich with development throughout the 2018 bear market. It’s merely an observation.
Ethereum Has Competition
Many have pointed to Ethereum’s declining price as the reason for the falling hash rate. It is true that Ethereum has declined some 85% against BTC since the height of the bull market a year and a half ago. However, Bitcoin also suffered throughout 2018, and still, it has managed to soar above and beyond its previous hash rate. So, is this really the reason?
The real reason could be that there is now significant competition among other cryptocurrency platforms. Like it or not, EOS, Tron, and Tezos, among others, are all actively competing with Ethereum and have fully-functioning mainnets. We can debate the merits of these other platforms, but the undeniable reality is that these competitors have taken some of the shine out of Ethereum. It is no longer the only platform with a functioning network in the game.
Ethereum undoubtedly has all the advantages. It is the only cryptocurrency beside Bitcoin which has been approved by regulators in the United States, for starters. It also boasts the largest development community in the entire industry.
However, time is of the essence in this space. Ethereum will always be a permanent fixture of the cryptocurrency industry, but it may be unfairly eclipsed by other platforms if it continues to act so passively.