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Two equal chances to dominate the Web3 world

For most casual digital asset investors, the Ethereum 2.0 upgrade promises to be a game-changing event that will improve efficiency, reduce network costs, and bring the entire blockchain and crypto space closer to a Web3 reality.

Ethereum has struggled with a lack of scalability and skyrocketing gas fees, and as it serves as the largest smart contract and DApp development platform, the move to a more reliable and scalable Proof-of-Stake (PoS) blockchain will be a welcome respite.

Unknown to most casual investors, however, Polkadot’s Substrate platform has made massive strides in the development of a parallel decentralized internet infrastructure that many believe will eventually eclipse that of Ethereum.

Related: The Polkadot architecture and introduction to the substrate infrastructure

Since the release of the Polkadot whitepaper, its value as a bridge between the Ethereum ecosystem and the many possibilities that make up a Web3 Internet experience has been at the forefront of Polkadot’s key selling points.

So how exactly does Polkadot compare to Ethereum? What is Ethereum’s current progress towards a decentralized internet and have Polkadot’s parachains become a viable threat to the dominant smart contract network? Here’s a quick look at the technicalities that separate Polkadot’s ecosystem from Ethereum’s upcoming upgrade.

Two ways to the decentralized Internet

To understand the value that Polkadot brings to the table, we must first compare Polkadot’s substrate and how it differs from what Ethereum currently offers.

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There is no denying that Ethereum was once considered a revolutionary technology and a coveted platform for DApp development. However, over the years, scalability has become Ethereum’s Achilles heel. With an estimated 1 million transactions per day, the Ethereum blockchain is only capable of processing 15 transactions per second (TPS), resulting in volatile gas fees. Although this number will increase with the upgrade to Ethereum 2.0, it will still lag far behind traditional centralized infrastructures like Visa, which can theoretically handle well over 1,700 TPS.

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In addition to its slow and congested network, Ethereum’s legacy consensus algorithms consume up to 112.15 TWh per year, which is comparable to the power consumption of Portugal or the Netherlands. Simply put, Ethereum relies heavily on a Proof-of-Work (PoW) algorithm, which requires computationally intensive mining to add new blocks to the chain and confirm transactions.

Related: Inside the blockchain developer’s mind: proof-of-work blockchain consensus

Ethereum 2.0 plans to address these concerns by moving from a PoW algorithm to a more efficient PoS algorithm that will eventually allow Ethereum to become carbon neutral and gain more speed.

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Ethereum 2.0 will also use sharding as a scalability solution, breaking up the network into smaller pieces that can process transactions in parallel. In theory, this allows Ethereum to process an infinite number of transactions per second, but in practice this is limited by the number of shards created.

As of today, the move to Ethereum 2.0 is still a work in progress, although the testnet is live. Frustrated by the delays, ambitious project developers like Ethereum co-founder Gavin Wood left Ethereum to build the Web3 Foundation and Parity Technologies. Parity Technologies and the Web3 Foundation are mainly focused on the development of three main technologies: Parity Ethereum (aka Serenity), Parity Substrate and Polkadot.

Ultimately, the goal of these organizations and projects is to accelerate the Web3 vision.

your victories and defeats

As a core blockchain infrastructure company, Parity Technologies offers several tools and software to help developers launch their blockchains quickly and easily. The Parity Substrate is a toolkit for building custom blockchains from scratch, powering some of the world’s most popular blockchains such as Polkadot, Kraken, and Chainlink.

Parity Ethereum, on the other hand, is the software that runs Ethereum 2.0 clients like Geth and Prysm. Parity’s main contribution to Polkadot is the Substrate framework, which is used to build custom blockchains or parachains on top of the Polkadot Relay Chain.

Related: How Polkadot’s Parachain Auctions Enable a Decentralized Web3

Compared to the existing system of Ethereum as well as the upcoming sharding framework, Substrate is very modular and allows building custom blockchains. Developers can choose the features they want for their parachains, up to the level of technical difficulty they can handle.

Here are some examples of how the functionality of blockchains built with Substrate can differ:

  • Zeitgeist has prediction markets (similar to sports betting or betting on what the weather will be like next week) and uses them for on-chain governance.
  • KILT is a highly complex system for decentralized identifiers (DIDs) with the aim of bringing identity to Web3.
  • Subsocial consists of two communicating Substrate blockchains with social interactions built into the code (one palette for posting, another palette for comments, another palette for reactions, etc.).
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As a result, with Substrate, users can assemble a few pallets and start their chains in under an hour, which is far easier than starting from scratch. In the future, they could be vastly superior to Ethereum in completing certain tasks. Additionally, they can still easily communicate using XCMP, a cross-consensus message format developed for Polkadot that allows interaction between networks that use the same relay chain.

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Substrate also provides developers with a library of modules that can be used to create compatibility between new blockchains and legacy chains like Bitcoin and Ethereum. Additionally, you don’t even need to create blockchains that connect to Polkadot while using substrates. Put simply, any developer can use substrates to create forkless blockchains that can be updated without hard forks and in any ecosystem outside of Polkadot or Ethereum.

Regarding the validators, Polkadot uses a Nash equilibrium staking game that encourages the validators to behave in a way that is best for the network as a whole. This differs from Ethereum’s current emphasis on rewarding miners for their efforts, which often leads to centralization and high barriers to entry.

The Polkadot Relay Chain is also much more scalable than Ethereum’s, with the ability to process around 1,000 transactions per second compared to Ethereum’s meager 15.

Perhaps the only weak point in Polkadot’s armor is the fact that Parity Technologies had a major vulnerability in its multi-sig wallet software in 2017, when more than $30 million worth of ETH was stolen from multiple multi-sig wallets .

No confrontation, but complementarity

Ultimately, Polkadot is a complementary platform to Ethereum as both blockchain ecosystems share the same goal of providing a fully decentralized World Wide Web.

While Polkadot offers a ton of features and improved capacity, it’s still in its early days, with only a handful of applications (Moonbeam and Moonriver) running on its network. At the same time, Ethereum is still a jack of all trades with hundreds of thousands of developers and projects, giving it a significant advantage in terms of adoption.

Both Polkadot and Ethereum serve different purposes and can coexist and complement each other in the decentralized future.

A look into the future

Polkadot and Ethereum have their own strengths and weaknesses. In the future, they might even coexist to provide a fully decentralized Web3. Developers could use Substrate to create decentralized social media platforms or video sharing apps that integrate Ethereum’s ERC-20 token economy. As more developers come on board to accelerate the transition to a Web3 internet, there’s no telling what the future holds for both Polkadot and Ethereum.

This article does not contain any investment advice or recommendation. Every investment and trading move involves risk and readers should do their own research when making a decision.

The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ole Mel is the developer of Subsocial, a social networking platform designed to power the social networks of the future. These apps have built-in monetization methods and censorship resistance where the users own their content and social charts. Built with Substrate palettes, Subsocial is unique to the Dotsama ecosystem and specifically designed for social interactions. These interactions don’t have to be specifically social, as subsocial can support apps like YouTube, Shopify, or even Airbnb.